Dollar Consolidates Gains

* Despite its rise for the first day in four on Friday, the dollar fell versus its counterparts except the yen for the week. An unexpected decline in US retail sales raised doubts about the US economic outlook. On the positive side, US consumer sentiment rose to the highest level since January 2008. US stocks overcame earlier weakness and ended another volatile trading week, up 4.76 for the day and 26.72 for the week to 1,091.60. The yen fell for a second day. Sterling declined for the first day in five, pressured by an unexpected drop in UK industrial production. The Australian dollar was supported by Chinese economic data. The Canadian dollar was pressured by the US retail weakness.

* The dollar index rose for the first day in four after reaching a 15-month high in the beginning of the week. Up 15% since December and in a strong uptrend, the index is rising along the trading channel’s upper trading band. There is support around the 87-handle. If this is broken, there may be a test of the lower trading band in the 85 area. A continuing increase in the dollar index will further pressure financial institutions’ balance sheets and pressure asset prices.

www.cmsfx.com

Financial and Economic News and Comments

US & Canada

* US retail sales unexpectedly fell 1.2% m/m to $362.5 billion in May, the first fall in eight months, after an upwardly revised 0.6% m/m advance in April, according to data from the Commerce Department. Retail sales excluding autos unexpectedly declined 1.1% m/m to $300.7 billion, following April’s upwardly revised 0.6% m/m increase. Retail sales rose 6.9% y/y in May and rose 6.1% y/y less autos.

www.cmsfx.com

* The Reuters/University of Michigan preliminary consumer sentiment index increased to a higher-than-expected 75.5 in June from 73.6 in May, indicating US consumer confidence climbed to the highest level since January 2008, the latest Thomson Reuters/University of Michigan surveys of consumers showed, compared with June 2009’s 70.8. The current economic conditions index advanced to 82.9 in June, the highest since March 2008, from 81.0 in May. The consumer expectations index increased to 70.7, the highest since September, from May’s 68.8.

www.cmsfx.com

* US business inventories grew a marginally less-than-expected 0.4% m/m in April, a fourth consecutive monthly increase, after an upwardly revised 0.7% m/m advance in March, according to data from the Commerce Department. Business sales increased 0.6% m/m, following March’s upwardly revised 2.5% m/m gain. The inventories/sales ratio was 1.23 in April, unchanged from the prior month but down from April 2009’s 1.43. Inventories declined 2.8% y/y in April while sales rose 13.1% y/y.

Europe

* German wholesale prices were up 0.3% m/m in May, a seventh straight month-on-month gain, after a 1.7% m/m increase in April, a report from the Federal Statistical Office showed. May wholesale prices rose 6.2% y/y, a sixth consecutive year-on-year rise, following a 6.0% y/y April advance. The numbers were in line with forecasts.

www.cmsfx.com

* UK industrial production unexpectedly fell 0.4% m/m in April, the first fall in three months, after a 2.0% m/m increase in March, according to data from the Office for National Statistics. April industrial production rose 2.1% y/y, a third consecutive year-on-year rise, following an upwardly revised 2.6% y/y March advance. Manufacturing production unexpectedly slid 0.4% m/m in April, the first decline in three months, after a downwardly revised 2.2% m/m increase in March. April manufacturing production grew 3.4% y/y, a third successive year-on-year gain, following an upwardly revised 3.7% y/y March rise.

* UK PPI output increased a slightly less-than-expected 0.3% m/m in May, a 15th straight monthly gain, after an upwardly revised 1.6% m/m advance in April, reflecting price increases in most product groups particularly petroleum, and alcohol products, PPI data from the Office for National Statistics showed. May PPI output rose 5.7% y/y, following an upwardly revised 5.9% y/y April advance. Core PPI output were up 0.1% m/m in May after an upwardly revised 1.2% m/m increase the prior month. May core PPI output grew 4.4% y/y, following an upwardly revised 4.5% y/y April rise. PPI input fell as forecast 0.6% m/m in May, the first fall in eight months, reflecting a price decline in crude oil, after a downwardly revised 0.5% m/m increase in April. May PPI input rose 11.2% y/y, an eighth straight year-on-year rise, following a 13.1% y/y April gain.

* UK GDP grew 0.6% in the three months ending in May, a seventh straight gain, after an upwardly revised 0.7% advance in the three months ending in April, according to GDP estimates by the National Institute of Economic and Social Research.

* UK consumer expectations for price increases in the next 12 months accelerated to 3.3%, the highest level since August 2008, a quarterly Bank of England survey in May showed, compared with expectations of a 2.5% increase in February.

Asia-Pacific

* China’s consumer-price inflation rate rose to 3.1% y/y in May, a 19-month high, from 2.8% y/y in April, and the producer-price inflation rate quickened to 7.1% y/y from April’s 6.8% y/y, according to figures from the Statistics Bureau. Retail sales climbed 18.7% y/y in May, larger than an 18.5% y/y April gain. Industrial production grew 16.5% y/y after April’s 17.8% y/y advance. Urban fixed-asset investment rose 25.9% ytd in May, compared with 26.1% ytd in April. New loans totaled a more-than-expected 639.4 billion yuan ($93.6 billion), a separate report from the People’s Bank of China showed.

Источник: Hans Nilsson

11.06.2010