US Dollar Rising On Better Than Expected Economic Data
Washington (July 15) The dollar is up against all of its major rivals Friday afternoon, but has pared its early gains against the Japanese Yen. Investors were confronted with a slew of US economic reports this morning, the results of which were mixed. However, traders appear to be focusing on the positives, like the stronger than expected reads on retail sales and industrial production, as well as the continued rise in consumer prices.
Suggesting strength in consumer demand, the Commerce Department released a report on Friday showing a much bigger than expected increase in US retail sales in the month of June. The Commerce Department said retail sales climbed by 0.6% in June compared to economist estimates for a 0.1% uptick.
Despite another jump in energy prices, the Labor Department released a report on Friday showing that US consumer prices rose by slightly less than expected in the month of June. The Labor Department said its consumer price index rose by 0.2% in June after rising by a matching 0.2% in May. Economists had expected prices to rise by 0.3%.
Manufacturing growth in New York State slowed to near stagnation levels in July, according to results of a survey conducted by a branch of the US central bank. The result was a surprise to economists, who had generally expected a less dramatic slowdown.
The move came as new orders contracted slightly in the month and as shipments flattened out.
The New York Federal Reserve said its Empire State Index, a gauge of manufacturing in New York State , came in at 0.6 in July. This was down from a level of 6.01 in the previous month.
Economists had expected the number to dip in the month. However, they had generally expected a much smaller decline, with the consensus calling for a reading of 5.0.
After reporting a pullback in US industrial production in the previous month, the Federal Reserve released a report on Friday showing that production rebounded by more than anticipated in the month of June. The report said industrial production climbed by 0.6% in June after falling by a revised 0.3% in May.
Economists had expected production to rise by 0.4% compared to the 0.4% drop originally reported for the previous month.
Partly reflecting notable growth in retail inventories, the Commerce Department released a report on Friday showing a slightly bigger than expected increase in business inventories in the month of May. The report said business inventories rose by 0.2% in May after inching up by 0.1% in April. Economists had expected another 0.1% uptick.
With high income households expressing concerns about the prospects for the economy, the University of Michigan released a report on Friday showing a notable deterioration in US consumer sentiment in the month of July.
The University of Michigan said the preliminary reading on the consumer sentiment index for July fell to 89.5 compared to the final June reading of 93.5. Economists had expected the index to come in unchanged.
The dollar has climbed to around USD1.1065 against the Euro Friday afternoon, from an early low of USD1.1148 .
Eurozone inflation turned positive as initially estimated in June, final data from Eurostat showed Friday. Consumer prices edged up 0.1% in June from a year ago, offsetting a 0.1% fall in May. This was the first rise in five months.
The euro area trade surplus declined in May as the fall in exports exceeded the pace of decrease in imports, Eurostat said Friday. The trade surplus fell to a seasonally adjusted EUR 24.5 billion in May from EUR 25.4 billion in April. It was forecast to drop to EUR 25 billion .
The buck has also risen to around USD1.3180 against the pound sterling this afternoon, from an early low of USD1.3480 .
UK construction output declined in May after recovering a month ago, the National Bureau of Statistics said Friday. Construction output slid 2.1% in May from a month ago, reversing a 2.8% rise in April. It was forecast to fall 1.2%.
The greenback reached a 3-week high of Y106.313 against the Japanese Yen this morning, but has since eased back to around Y105.565 .