The US$ is generally a bit stronger on Thursday despite a miss in the expected US inflation outcome, which underlined the prospect of a Fed rate cut in coming months. The CPI rose by 0.1% mm in May while core CPI rose by 0.1% mm. Annually, the headline CPI slowed to 1.8% yy, down from 2.0% yy and missed expectation of 1.9% yy, while the core figure slowed to 2.0% yy, down from 2.1% yy and missed expectation of 2.1% yy. The Euro was under some pressure after Donald Trump threatened sanctions on the EU if the Nord Stream gas pipeline project between Russia and Europe persists, while Cable was lower as Brexit political conflict again took its toll.
In other markets, oil prices tumbled 4% after the US Energy Information Administration reported an unseasonable weekly build in crude inventories, which defied market expectations for a drawdown amid the peak summer driving period. The EIA said in its weekly report that crude oil inventories rose by 2.21 million barrels during the week to June 7, adding to the previous week’s surge of 6.77 million barrels. This came about despite a forecast of a stockpile drawdown of 480,000 barrels. Elsewhere, stocks were very slightly lower, with one eye on the ongoing trade war prospects, while Gold was up by around 0.4% despite the strength seen in the dollar, liking the weak inflation figure and the increasing hopes of a rate cut.
Thursday will be a busy session, beginning with the Australian Consumer Inflation Expectation and the May unemployment data (exp 5.1%, +17K, PR; 65.8%). Europe will look to the German CPI for guidance (CPI, exp 0.2%mm, 1.4%yy; HICP, exp 1.3%yy) as well as the Interest Rate Decision from the SNB, where rates are expected to remain unchanged at -0.75%, and the attention will be on the Press Conference. Later on, the US will be rather thin ahead of Friday’s busy session, and it will be political headlines that drive the market’s direction.
Economic data highlights will include:
Thur: EuroGroup Meeting, Australian Consumer Inflation Expectation, Unemployment, Swiss SNB Interest Rate Decision/Press Conference/ Financial Stability Report, German CPI/HICP, EU Industrial Production, US Import/Export Index, Jobless Claims.
Fri: N Business PMI, Food Price Index, China Retail Sales, Fixed Asset Investment, NBS Press Conference, Japan Industrial Production, Capacity Utilisation, German Wage Price Index, US Retail Sales, Capacity Utilisation, Industrial Production, Business Inventories, Michigan Consumer Sentiment Index
Market moves, in brief:
FX: DXY 97.00 (+0.30%)
Bonds: US10Y; 2.12% (-1.10%), German 10Y; -0.236% (-1.64%), UK 10Y; +0.87% (+2.21%), Australian 10Y; 1.44% (-2.1%), NZ 10Y; 1.715% (-1.44 %), China 10Y; 3.26% (+0.68%)
Stock Indices: DJI; -0.17%, S+P; -0.20%, NASDAQ; -0.38%, EUStoxx50; -0.43%, FTSE100; -0.42%, Shanghai Composite; -0.56%,
Metals: Gold $1333 oz (0.47%), Silver $14.77 oz (+0.19%), Copper $2.654 lb (-0.66%), Iron Ore $103.00 per tonne (NYMEX) (+0.22%),
Oil: WTI $ 51.05 pb (-3.72%)
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