Dollar treads water after tame US inflation report, yen rally stalls
Updates as of 1016 ET
By Alden Bentley and Amanda Cooper
NEW YORK/LONDON, July 26 (Reuters) -The dollar eased fractionally alongside Treasury yields after the release of tame U.S. inflation data that is unlikely to deflect the Federal Reserve from adopting a less restrictive monetary policy in the coming months.
The Commerce Department's June personal consumption expenditures (PCE) price index nudged up 0.1%, as expected, after being unchanged in May, underscoring an improving inflation environment that potentially positions the Fed to begin cutting interest rates in September.
Year over year, the PCE price index climbed 2.5% after rising 2.6% in May, also in line with forecasts by economists polled by Reuters. The Fed closely tracks the PCE price measures for monetary policy, and subsiding inflation pressures could help officials meeting next week gain confidence that inflation is moving toward the U.S. central bank's 2% target.
Steve Englander, head of G10 FX research at Standard Chartered Bank in New York, said that quarterly PCE data released with Thursday's surprisingly strong 2.8% growth rate print on last quarter's GDP prompted mental preparation for a worse monthly read.
Thursday's number showed PCE prices rising at a 2.9% rate, so the rise reported Friday was more of a relief.
"The number was good enough," Englander said. "It wasn't a home run but compared to yesterday markets said 'yep nothing to worry about here, it doesn't really derail September and they weren't going to cut in July anyway. So life goes on.'"
Meanwhile, the yen JPY=EBS has dominated currency markets this month after surging to a near three-month high of 151.945 per dollar on Thursday. It started the month at a 38-year low of 161.96 before Bank of Japan currency intervention and expectations that the Bank of Japan would deliver a hawkish policy tweak at its meeting next week flushed out yen carry-trade shorts.
The Bank of Japan, on the other hand, may raise rates next week, with markets pricing in a 64% chance of a 10 bps hike. 0#BOJWATCH
"What you're seeing is Japanese investors and foreign investors leaving the Japanese market and investing in global tech, predominantly. So unless whatever the BOJ does persuades (investors) to come back into the Japanese asset market, it's very hard to make the case that the yen is in the midst of a turning point for now," he said.
The dollar/yen was 0.01% firmer at 153.95. The euro EUR= was up 0.18% at $1.0863.
The dollar index =USD, which measures the greenback against a basket of six currencies including the yen and the euro, was off 0.07% at 104.26.
"The extent to which we're being shocked by economic data at times is outweighed by markets repositioning based on elections and equity-market performance. Other things are happening that don't have anything to do with whether GDP is 2.8% or 2.6.%," Englander said.
Sterling GBP= strengthened 0.07% to $1.2860. That price is well below the one-year high of $1.3044 hit last week, with traders pricing a 50% chance of the Bank of England cutting rates when it meets next week. Markets are anticipating 51 bps of cuts this year. 0#BOEWATCH
Dollar/Canada CAD= was up 0.09% at 1.3838.
Against the Swiss franc CHF=, the dollar strengthened 0.11% to 0.883. The dollar CNH= strengthened 0.27% at 7.259 versus the offshore Chinese yuan. The Australian dollar AUD= strengthened 0.34% to US$0.656 and kiwi NZD= strengthened 0.17% to US$0.5896.
The yield on benchmark U.S. 10-year notes US10YT=RR fell 5.2 basis points, while two-year note US2YT=RR yields, which typically moves in step with interest-rate expectations, were down 5.4 basis points after the report.
The Federal Open Market Committee meets July 30 and 31, the same days as the BOJ. It is expected to hold borrowing costs steady but traders continue to bet the Fed will cut at its next meeting in September and see up to two more rate cuts this year. FEDWATCH
In cryptocurrencies, bitcoin BTC= gained 3.82% at $67,767.60. Ethereum ETH= rose 3.58% at $3,265.80.
World FX rates https://tmsnrt.rs/2RBWI5E
The yen has surged against the dollar https://reut.rs/4c0H7oK
Reporting by Alden Bentley in New York, Amanda Cooper in London and Ankur Banerjee in Singapore; Editing by Gareth Jones, Kirsten Donovan, Angus MacSwan and Rod Nickel
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
