Weaker than expected CPI readings for April dampened the dollar’s gains, but sterling still wound up at the bottom of the forex pile thanks to the BOE statement.
- U.S. headline CPI posted 0.2% uptick vs. estimated 0.3% gain in April
- U.S. core CPI up by 0.1% vs. projected 0.2% increase, 0.2% previous
- U.S. initial jobless claims at 211K vs. 219K consensus
- Canada’s NHPI posted flat reading as expected
- Business NZ manufacturing index improved from 53.1 to 58.9
Weak U.S. CPI
Inflationary pressures were subdued in April as CPI readings missed estimates, keeping traders doubtful that the Fed could hike again soon.
The headline reading came in at 0.2% versus the estimated 0.3% increase but still reflected a rebound over the earlier 0.1% uptick. The core version of the report posted a 0.1% gain instead of the estimated 0.2% increase.
Underlying components revealed that the gains were mostly spurred by higher costs of gasoline and rent. Broader indices for energy and food also ticked higher but remained short of estimates.
Return of risk appetite?
Commodities and stock indices closed higher for the day while U.S. bond yields retreated on weaker tightening expectations.
- Dow 30 index is up 196.99 points to 24,739.53 (+0.80%)
- S&P 500 index is up 25.28 points to 2,723.07 (+0.94%)
- Nasdaq is up 65.07 points to 7,404.98 (+0.89%)
Crude oil continued to rake in more gains while gold also ticked higher.
- Gold rose to $1,321.22 per troy ounce (+0.65%)
- WTI crude oil rose to $71.38 per barrel (+0.34%)
Treasury yields retreated, likely due to speculations that the Fed could keep interest rates unchanged for a bit longer.
- U.S. 10-year yield is down to 2.966%
- U.S. 5-year yield fell to 2.833%
- U.S. 30-year yield is down to 3.114%
Major Market Mover(s):
The pound was stuck at the bottom of the forex pile by the end of the New York session, unable to take advantage of the selloff in the dollar.
GBP/USD slid from 1.3531 to a low of 1.3459, GBP/JPY tumbled to a low of 147.49, EUR/GBP popped up to a high of .8837, and GBP/NZD is down to 1.9420.
The scrilla was the second worst-performer for the day as weaker than expected CPI dashed hopes of seeing another Fed hike soon.
EUR/USD advanced from 1.1870 to a high of 1.1947, USD/JPY fell to a low of 109.33, USD/CHF retreated to 1.0031, and AUD/USD is up to .7529.
Watch Out For:
- 1:30 am GMT: Australian home loans (-1.9% expected, -0.2% previous)