Published: Sat, July 15, 2017
Money | By Armando Alvarado

Consumer Prices Unchanged in June

Consumer Prices Unchanged in June

Dollar dipped against a basket of major currencies on Friday, after weaker-than-forecast data on consumer prices and retail sales in June raised doubts about United States economic growth and whether the Federal Reserve would raise interest rates again in 2017.

The fourth straight below-forecast reading on the consumer price index in June pushed inflation further away from the Fed's 2-percent goal.

The so-called core CPI, which strips out food and energy costs, edged up 0.1% in June, matching the increase of the two previous months.

New Zealand's two-year swap rate rose 1 basis point to 2.26 while the 10-year swaps rose 3 basis points to 3.35 percent. Over the last 12 months, "headline" inflation rose 1.6 percent.

In early trading, USA 10-year yield fell to 2.308 percent, from 2.331 percent before the data.

The University of MI released a report on Friday showing a notable deterioration in USA consumer sentiment in the month of July.

The home currency resumed a tad higher at 64.57 from weekend closing level of 64.60 at the Interbank Foreign Exchange (forex) market. Economists are expecting a quarterly rise of 0.2 percent for annual inflation to be running at 1.9 percent.

But the drag was largely due to the energy index, which fell 1.6% in June after declining 2.7% in May.

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Global benchmark Brent inched down 0.1 percent to $48.36 following Thursday's 1.4 percent jump, and is headed for a 3.6 percent gain this week.

However, "The current data provide few reassurances for the Federal Reserve" about the growth outlook, economist Diane Swonk said.

The dollar's index against a basket of six major currencies was hovering at 95.58, just above its nine-month low of 95.47 plumbed at the end of June. The Canadian dollar strengthened against its US counterpart on Friday as oil extended its rally, while the gap between Canadian and USA bond yields narrowed after weaker-than-expected US data.

UK's benchmark FTSE 100 closed down by 0.7 percent, the pan-European FTSEurofirst 300 ended the day down by 0.01 percent, Germany's Dax ended down by 0.2 percent, France's CAC finished the day down by 0.1 percent. The gap between Canada's 2-year yield and its US equivalent narrowed by 1.2 basis points to a spread of -14.4 basis points, its narrowest since August 18.The narrower spread comes after the Bank of Canada raised interest rates on Wednesday for the first time in seven years. The Dow futures dropped 5 points or 0.02%, the S&P 500 futures were unchanged, while the Nasdaq 100 futures rose 13 points, or 0.23%.

The unemployment rate is at 4.4 percent, near a 16-year low.

The Fed typically hikes rates to ward off rising inflation, yet price gains have declined this year. The 10-year German Bund ticked up nearly one basis point to yield 0.525 per cent. It was at $1.145 Friday.

The euro was up 0.37 percent against the greenback to $1.1437 and sterling was 1.07 percent higher at $1.3073, after hitting $1.3082, its highest since September 23, 2016.

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