Dollar Mixed After U.S. Consumer Prices; Fed Decision Awaited
March 15 2017 - 5:39AM
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The U.S. dollar was trading mixed against its major counterparts
in the European session on Wednesday, after data showed that the
U.S. consumer price inflation and retail sales rose in line with
forecasts in February. The Federal Reserve wraps up its two-day
meeting later in the day, with a quarter percentage point rate hike
almost certain.
The Labor Department released a report showing a modest uptick
in U.S. consumer prices in February, as a drop in gasoline prices
partly offset increases in prices for food, shelter and
recreation.
The Labor Department said its consumer price index inched up by
0.1 percent in February after climbing by 0.6 percent in January.
The uptick in prices matched economist estimates.
Data released by the Commerce Department showed that U.S. retail
sales rose modestly in February, with the uptick in sales matching
economist estimates.
The Commerce Department said retail sales inched up by 0.1
percent in February after climbing by an upwardly revised 0.6
percent in January.
Economists had expected sales to creep up by 0.1 percent
compared to the 0.4 percent increase originally reported for the
previous month.
Investors focus on the FOMC decision, due at 2:00 pm ET, when
the bank is widely expected to increase benchmark rate by 0.25
percent to a range of 0.75 percent - 1 percent. The Fed statement
is likely to be watched for further clarity on the bank's interest
rate plans for the rest the year.
Fed Chairwoman Janet Yellen will hold a press conference at 2:30
pm ET, when she will give an update on the U.S. economy.
The currency was trading lower in the Asian session, weighed by
a fall in U.S. treasury yields.
The greenback that declined to 114.56 against the Japanese yen
at 7:45 am ET rebounded modestly to 114.76 following the data.
Figures from the Ministry of Economy, Trade and Industry showed
that Japan's industrial production declined less than initially
estimated in January.
Industrial production fell 0.4 percent month-over-month in
January instead of a 0.8 percent drop estimated earlier. It was the
first decline in six months.
The greenback held steady around 1.0623 against the euro, after
rebounding from a low of 1.0639 hit at 3:45 am ET. The pair was
valued at 1.0604 when it finished Tuesday's trading.
European Central Bank Executive Board member Peter Praet said
that euro area inflation is being driven by energy and food prices
and underlying price pressures remain subdued, implying that there
was no need for a change in the current monetary policy stance.
"Looking through recent volatility, the inflation outlook does
not at this stage warrant a reassessment of the current monetary
policy stance," Praet said in a panel discussion at the G-20
conference in Frankfurt.
Following a decline to 1.0074 against the Swiss franc at 4:05 am
ET, the greenback rebounded to 1.0096 and held steady in the course
of the trading session. The pair finished yesterday's trading at
1.0101.
After having fallen to a 9-day low of 1.2255 against the pound
at 2:00 am ET, the greenback reversed direction shortly and held
steady around 1.2196. At Tuesday's close, the pair was valued at
1.2153.
Data from the Office for National Statistics showed that the UK
jobless rate fell to the lowest level since 1975 at the start of
the year.
The ILO unemployment rate came in at 4.7 percent in three months
to January versus 5.1 percent seen a year earlier.
The U.S. NAHB housing market index for March and business
inventories for January are due shortly.
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