Tuesday, 22 August, 2017

PA ANALYSIS: Weak inflation casts uncertainty over United States rate rises

Fed chairman's comments saw dollar crash. Tyrone Siu  Reuters Fed chairman's comments saw dollar crash. Tyrone Siu Reuters
Heather Davidson | 16 July, 2017, 01:12

Reaction was largely muted to a story by Politico that Trump is increasingly unlikely to nominate Yellen next year for a second term, and National Economic Council Director Gary Cohn is the leading candidate to succeed her. That, however, started to show-up on Friday morning when we got even more disappointing USA data.

The U.S. consumer price index increased 1.6 percent, the smallest gain since October 2016, after rising 1.9 percent in May, the Labor Department said.

"We expect a little more cautious language from Fed officials on the inflation outlook going forward", said Michael Hanson, chief economist at TD Securities in NY.

The retrenchment by Yellen has put markets on edge and as a result there will be much focus on the release of Core and Headline Inflation (CPI) and Retail Sales data this afternoon at 13.30 BST. That's down sharply from February, when prices rose 2.7 percent from a year earlier.

Economists had forecast the CPI edging up 0.1 per cent last month and climbing 1.7 per cent from a year ago. Excluding food and energy, prices rose 0.1%.

Annualized consumer price inflation (CPI) unexpectedly eased in June, while the core CPI repeated its prior reading, official data showed on Friday. Cor CPI inflation was 1.7%, same as in May.

The US dollar held steady on Friday as investors remained on guard ahead of the US annual inflation rate forecast which is expected to restrain the greenback from further gains.

Jimmy Carter back to building homes after hospital treatment
Boniface Hospital in Winnipeg, Canada, on Thursday, after he collapsed working on a Habitat for Humanity home due to dehydration . Habitat for Humanity CEO Jonathan Reckford said the former president did not appear to be in serious medical danger.

Homes evacuated after depression forms in Land O'Lakes neighborhood
Evacuations continued and increased to ten homes. "Hole grew fast and swallowed that home pretty quickly", the Pasco PIO said. WFLA-TV said the sinkhole started out about the size of a small swimming pool, but increased in size.

Air quality, severe thunderstorm and flash flood alert issued for area
The NWS said affected by flooding are Lackawanna, West Seneca, Hamburg, East Aurora, Warsaw, Varysburg, Geneseo and Dansville. The agency said flooding led to a temporary track closure and no alternate transportation was available at the time.

Gas prices fell 2.8 percent in June, after a 6.4 percent fall in May. While Ms. Yellen reiterated her expectation that inflation will rise over the coming years, she also said the central bank would be watching inflation data closely and could reassess its strategy if it continues to disappoint. From what we've seen of recent - both the European Central Bank and the BoJ have made efforts to talk-down their currencies and, if they're effective next week, this could bring a modicum of strength to the U.S. Dollar that would essentially amount to a retracement of the "bigger picture' bearish trend".

The New Zealand dollar another high-earning currency that has gained from significant risk appetite this week, shed 0.02 percent to 0.7318 after reaching an eight-month peak of 0.7369 on Thursday. USA retail sales unexpectedly fell in June for a second straight month, which could temper expectations of strong acceleration in economic growth in the second quarter.

WASHINGTON (AP) - Americans curtailed their shopping in June, with less spending at restaura... Without autos, retail sales are expected to be up 0.2 percent. It earlier fell to 2.279 percent, its lowest since June 30.

Meanwhile, the Commerce Department reported that retail sales slipped 0.2% in June, while sales excluding autos also declined 0.2% from May.

Consumer prices in the United States came in unchanged in the month of June, according to a report released by the Labor Department on Friday.

The earnings from the major banks kick off the second-quarter earnings season, which gets very busy next week.

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