Dollar Rising Against European Rivals As "Brexit" Concerns Mount

Frankfurt (Jun 14)  The dollar is gaining ground against the Euro and the pound sterling Tuesday afternoon, as growing concerns over a potential "Brexit" continues to turn investors more risk averse. The Japanese Yen is continuing to benefit from the uncertainty, due to its safe have appeal.

Meanwhile, many investors remain on the sidelines ahead of tomorrow's announcement from the  Federal Reserve  .  The Fed  will wrap up its 2-day policy meeting on Wednesday and is widely expected to make no change with regard to interest rates. Investors will be paying close attention to the accompanying statement for any clues to when the central bank will hike rates again.

Investors were also confronted with the question of how today's retail sales report will impact the Fed's outlook. Retail sales in the US increased by more than expected in the month of May, according to a report released by the  Commerce Department  on Tuesday. The  Commerce Department  said retail sales climbed by 0.5% in May after surging up by 1.3% in April. Economists had expected sales to rise by 0.3%.

Reflecting another substantial increase in fuel prices, the  Labor Department  released a report on Tuesday showing that US import prices surged up by much more than expected in the month of May. The report said import prices jumped by 1.4% in May after climbing by an upwardly revised 0.7% in April.

Economists had expected import prices to rise by 0.8% compared to the 0.3% increase originally reported for the previous month.

 The Labor Department  said export prices also shot up by 1.1% in May following a 0.5% advance in April. Export prices had been expected to edge up by 0.2%.

Business inventories in the US saw a slight uptick in the month of April, the  Commerce Department  revealed in a report released on Tuesday. The report said business inventories inched up by 0.1% in April after rising by a downwardly revised 0.3% in March.

Economists had expected inventories to edge up by 0.2% compared to the 0.4% increase originally reported for the previous month.

The dollar climbed to over a 1-week high of  USD1.1189  against the Euro Tuesday, but has since eased back to around  USD1.1210  .

 Eurozone  industrial production recovered at a faster than expected pace in April, Eurostat showed Tuesday. Industrial production climbed 1.1% in April from March when it fell by revised 0.7%. Production was forecast to expand 0.8%. This was the first increase in three months.

 Eurozone  employment increased at a stable pace for the second straight quarter in the three months ended March, figures from Eurostat showed Tuesday. The number of employed persons grew 0.3% quarterly in the first quarter, the same rate of rise as in the previous two quarters.

Two ICM polls, one online and one conducted by telephone, showed on Monday that  Britain  appears poised to leave the EU with just over a week to go before referendum day.

The buck has extended its recent gains against the pound sterling Tuesday, rising to a 2-month high of  USD1.4088  from around  USD1.4650  a week ago.

 UK  inflation held steady at a very low level in May as a rise in transport costs largely offset the decline in clothing and footwear prices. Meanwhile, factory gate prices continued the decline that started in mid-2014.

Inflation came in at 0.3%, the same rate as in April, data from the  Office for National Statistics  showed Tuesday. The figure was forecast to rise to 0.4%.

British house price inflation eased for the first time in eight months in April, figures from the  Office for National Statistics  showed Tuesday. The house price index rose 8.2% year-over-year in April, slower than previous month's 8.5% hike.

The greenback slipped to a low of  Y105.621  against the Japanese Yen Tuesday morning, but has since rebounded to around  Y106.025  .

 Japan's  industrial production increased more than initially estimated in April, final data published by the  Ministry of Economy, Trade and Industry  showed Tuesday. Industrial production climbed 0.5% in April from March instead of 0.3% reported initially.

Source: KitcoNews