US Dollar Dips After Disappointing Economic Reports

Washington (July 14)  The dollar is weakening against all of its major competitors Tuesday, following the release of a pair of disappointing economic reports. Retail sales and import & export prices both came in weaker than anticipated this morning. Investors are also playing it cautious ahead of Federal Reserve Chair Janet Yellen's 2-day testimony before the US Congress, which will begin tomorrow.

After reporting a sharp jump in US retail sales in the previous month, the Commerce Department released a report on Tuesday showing that sales unexpectedly pulled back in the month of June. The report said retail sales fell by 0.3% in June compared to economist estimates for an increase of about 0.3%.

The unexpected drop in sales came following a 1.0 increase in May, which was downwardly revised compared to the 1.2% jump originally reported.

Import prices in the US unexpectedly saw a modest decrease in the month of June, according to a report released by the Labor Department on Tuesday, with a drop in non-fuel prices more than offsetting an increase in fuel prices.

The report said import prices edged down by 0.1% in June following a 1.2% increase in May. Economists had expected prices to inch up by 0.1%.

The Labor Department also said export prices fell by 0.2 in June after climbing by 0.6% in the previous month. Export prices had been expected to rise by 0.2%.

Business inventories in the US rose in line with economist estimates in the month of May, according to a report released by the Commerce Department on Tuesday.

The report said business inventories rose by 0.3% in May after climbing by 0.4% in April. The continued increase matched the consensus estimate.

Greek Prime Minister Alexis Tsipras has to convince his party and Parliament to back tough austerity measures by Wednesday's EU-imposed deadline or face the country's bankruptcy.

The dollar rose to an early high of USD1.0964 against the Euro Tuesday, but has since pulled back to around USD1.10.

Eurozone industrial production declined unexpectedly in May largely due to a fall in energy output, data from Eurostat showed Tuesday. Industrial production was down 0.4% month-on-month in May after staying flat in April. It was forecast to rise 0.2% in May.

German investor confidence declined less-than-expected in July as the crisis in China and Greece failed to result in much impact, survey results showed Tuesday. The Indicator of Economic Sentiment for Germany dropped to 29.7 from 31.5 in the previous month, the Mannheim-based Centre for European Economic Research or ZEW said. Economists had forecast a score of 29. The latest reading is well above its long-term average of 24.9 points.

Germany's inflation slowed as initially estimated in June due to falling energy prices, final data from Destatis showed Tuesday. Inflation eased to 0.3% in June from 0.7% in May. The inflation rate as measured by the consumer price index decreased after four months of uninterrupted increase.

Bank of England Governor Mark Carney said on Tuesday that an interest rate hike is moving closer. At the Treasury Select Committee hearing, Carney said the point at which interest rates may begin to rise is moving closer. It is counter-balanced somewhat by disinflation, he said.

There would inevitably be "shocks and adjustments," he cautioned. He reiterated that the increase in rates would be limited and gradual. The buck reached an early high of USD1.5449 against the pound sterling Tuesday, but has since dropped to over a 1-week low of USD1.5620.

UK inflation returned to zero in June, data published by the Office for National Statistics showed Tuesday. Consumer prices remained flat on a yearly basis in June as expected by economists after rising 0.1% in May.

House price inflation in the UK accelerated in May from a 16-month low in the previous month, figures from the Office for National Statistics showed Tuesday. Average house prices climbed 5.7% year-over-year in May, slightly faster than April's 5.5% increase. In March, prices had risen 9.6%.

The total value of like-for-like sales in the UK was up 1.8% on year in June, the British Retail Consortium said on Tuesday. That topped forecasts for an increase of 0.5% following the flat reading in May.

The greenback has retreated to around Y123.335 against the Japanese Yen this afternoon, from yesterday's high of Y123.723.

A leading economic index for Japan was down 0.1% in May, the Conference Board said on Tuesday, following the flat reading in April.

Source: AllianceNews