US Dollar Continues To Pull Back Amidst Data Drought
Washington (Jun 10) The dollar has been pulling back against all of its major competitors since the start of the current trading week. The US currency has been languishing due to a decided lack of economic data to drive the direction of trading. That trend has continued on Wednesday, but investors can look forward to a number of important economic reports over the next two sessions.
Retail sales for May and weekly jobless claims are due to be released on Thursday, as well as import & export prices for May and business inventories for April. The producer price index for May is slated for Friday, as well as the preliminary read on consumer sentiment for June.
Greece continues to dominate the headlines, following reports that Germany is considering making an aid offer to the debt ridden country. Bloomberg reported that Germany may be satisfied with Greece committing to at least one economic reform in return for aid.
Greek Prime Minister Alexis Tsipras was expected to meet with German Chancellor Angela Merkel and French President François Hollande today. Investors are anxiously awaiting to hear any further developments.
The dollar briefly slipped to a 3-week low of USD1.1386 against the Euro Wednesday morning, but has since climbed back to around USD1.1310 , nearly unchanged for the day.
French industrial and manufacturing output declined unexpectedly in April, the statistical office Insee revealed Wednesday. Industrial output dropped 0.9% from March when it remained flat. This was the first decline in five months. Economists had forecast production to grow 0.4%.
France's current account turned to a surplus in April, as a decline in imports of crude oil imports led to a narrowing in the visible trade deficit, the Bank of France said Wednesday. The current account showed a surplus of EUR 0.4 billion for April versus a deficit of EUR 1.4 billion for March. The merchandise trade deficit narrowed to EUR 1.1 billion from EUR 3.2 billion .
German business insolvencies continued to decline in the first quarter of 2015, the Federal Statistical Office said Wednesday. Local courts reported 5,715 business insolvencies in the first quarter, down 7.2% from the previous year quarter. The figure has been falling since the first quarter of 2010, when an annual increase of 6.7% was recorded.
The buck began Wednesday's session around USD1.5340 against the pound sterling, but has since dropped to a 2 1/2 week low of USD1.5515 .
UK industrial production expanded in April on oil and gas extraction, while manufacturing output shrank due to the weakness in pharmaceutical products. Data from the Office for National Statistics showed that industrial output grew 0.4% month-on-month in April, better than the expected growth of 0.1% but weaker than March's 0.6% increase.
Bank of Japan Governor Haruhiko Kuroda said the real exchange rate of the yen is already weak and it is unlikely to fall further. Inflation is expected to be around 2% target in the first half of fiscal 2016, Kuroda told lawmakers on Wednesday.
He reiterated that the bank will examine both upside and downside risks to economic activity and prices and make adjustments as appropriate.
BoJ policy board member Takehiro Sato said if the massive bond purchase program is continued over a long period, it could lead to extremely low interest rates being built into the fiscal plan.
"Once market participants have concern about fiscal discipline, controlling long-term interest rates will become difficult, even for the Bank," Sato said.
The greenback has dropped from around Y124.500 against the Japanese Yen early Wednesday to a 2-week low of around Y122.630 this afternoon.
Producer prices in Japan were up 0.3% on month in May, the Bank of Japan said on Wednesday. That beat forecasts for an increase of 0.2% following the 0.1% gain in April.
Core machine orders in Japan jumped 3.8% on month in April, the Cabinet Office said on Wednesday - worth 902.5 billion yen . The headline figure beat forecasts for a decline of 1.8% following the 2.9% gain in March.
Source: AllianceNews
