Dollar falls after US CPI, retail data disappoint

Fed chairman's comments saw dollar crash. Tyrone Siu  Reuters

A report released Tuesday by the EIA showed USA crude production rose by 59,000 barrels to 9.397 million barrels a day in the week ended July 7, which was the highest level in nearly two years.

Following the surprise rise in June producer prices yesterday, today's consumer prices, on the other hand, came out softer than expected over the same period.

The CPI, in particular, will garner interest because "if you take Yellen at her word the Fed is starting to second guess itself as to whether recent weakness is transitory", said ANZ Bank New Zealand senior economist Phil Borkin.

The core CPI data came in below expectations of a 0.2% rise, which likely will further reduce odds of another Federal Reserve rate hike in coming months.

The dollar index, was down 0.62% to 95.14 after earlier falling to 95.132, its lowest since September 2016.

Gold prices jumped 1.4 percent to the highest level in almost two weeks on Friday after data pointed to weak USA inflation, reaffirming doubts that the US central bank would again hike interest rates this year.

US two- and 30-year yields slid as well.

The annualized rate of inflation in several CPI components over the past three months showed declines of 4.9 per cent in apparel, 5.5 per cent in used cars and trucks and 4.1 per cent in professional services, said Heidi Learner, chief economist in NY for brokerage Savills Studley, a unit of Savills Plc.

"Yellen gave some hope to the dollar bulls with her acknowledgement of the improvements in the economy, but at the end of the day investors are still skeptical of what data is going to be like", said Kathy Lien, managing director at BK Asset Management in NY.

U.S. consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation and soft domestic demand.

That's down sharply from February, when prices rose 2.7 percent from a year earlier. The German 10-year yield fell as much as 4 basis points to 0.49 per cent, before paring declines to about 0.53 per cent at the end of day.

The greenback declined against the yen by 0.06 percent to 113.22 and still a bit far from reaching a four-month peak of 114.49 hit on Tuesday.

Stock markets, meanwhile, marched higher. The NT dollar this week rose 0.6 percent against the greenback from NT$30.610 on July 7.

The Dow Jones Industrial Average rose 19.57 points, or 0.09 per cent, to 21,572.66.

Their implied view fell to 47 percent shortly after the release of the latest CPI and retail sales data.

Gold was up 0.3 percent at $1,217.32 an ounce, heading for more than half-percent gain for the week.

A supply interruption in Nigeria boosted crude oil and prices posted a weekly gain of more than 4 percent on lower US stockpiles.

Brent crude futures, the worldwide benchmark for oil, were up 43 cents at $48.85 per barrel.

Brent crude futures, the global benchmark for oil, were up 31 cents at $48.73 per barrel.

Wall Street was set for a broadly flat open, with shares in JP Morgan and Wells Fargo dipping in pre-market trade after the US banks released mixed earnings reports, offsetting some of the central bank-fuelled optimism. This fell short of market expectations of a 0.1% increase. European stocks on the other hand enjoyed their best week in more than two months. The currency traded in a range of C$1.2693 to C$1.2747.

Anglo American, with considerable South Africa exposure, also benefited from the country suspending implementation of a new mining law which analysts had said could negatively impact firms.

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