The dollar is paring its gains against the Euro and the British pound this afternoon and remains weaker in comparison to the Japanese Yen. Early strength against its European rivals was due to a flight to safe havens, as “Brexit” concerns have unsettled investors. Volatility is likely to remain the norm until the referendum decides the issue next week.
However, risk appetite seems to have increased among investors this afternoon. The late reversal in the gold market provided a prime example of the shift away from risk aversion. Gold prices rallied to around $1320 an ounce this morning after yesterday’s dovish Fed statement, but ended the session back below $1300.
Consumer prices in the U.S. rose by slightly less than expected in the month of May, the Labor Department revealed in a report on Thursday. The Labor Department said its consumer price index edged up by 0.2 percent in May after climbing by 0.4 percent in April. Economists had expected prices to rise by 0.3 percent.
While the Philadelphia Federal Reserve released a report on Thursday showing a bigger than expected rebound by its index of regional manufacturing activity in the month of June, the bank said other broad indicators continued to reflect general weakness.
The Philly Fed said its diffusion index for current activity climbed to a positive 4.7 in June from a negative 1.8 in May, with a positive reading indicating growth in regional manufacturing activity. The index had been expected to rise to a positive 0.8.
First-time claims for U.S. unemployment benefits climbed more than expected in the week ended June 11th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims rose to 277,000, an increase of 13,000 from the previous week’s unrevised level of 264,000. Economists had expected jobless claims to edge up to 270,000.
With homebuilders reporting higher traffic and more committed buyers at their job sites, the National Association of Home Builders released a report on Thursday showing a bigger than expected improvement in homebuilder confidence in the month of June.
The report said the NAHB/Wells Fargo Housing Market Index climbed to 60 in June after holding steady at 58 for four consecutive months. Economists had expected the index to inch up to 59.
The dollar climbed to nearly a 2-week high of $1.1130 against the Euro Thursday, but has since retreated to around $1.1240.
Eurozone inflation remained negative as estimated in May, final data from Eurostat showed Thursday. Consumer prices fell 0.1 percent in May from a year ago, but slower than the 0.2 percent decline seen in April.
Policymakers of the Bank of England unanimously decided to maintain the monetary policy as they keenly await the outcome of the referendum on EU membership, which will ultimately decides the future course of action.
The bank also warned on the risks from ‘Brexit’ and vowed to take whatever action needed following the referendum to bring inflation to the target over the appropriate horizon.
The Monetary Policy Committee, led by Governor Mark Carney, voted 9-0 to hold the interest rate at a record low 0.50 percent, the bank said in a statement on Thursday.
The buck broke out to a 2-month high of $1.4011 against the pound sterling Thursday, but has since pulled back to around $1.4240.
U.K. retail sales increased more than expected in May on clothing and footwear sales, data from the Office for National Statistics revealed Thursday. The retail sales volume advanced 0.9 percent in May from the prior month, faster than the expected increase of 0.2 percent. Nonetheless, the pace of growth slowed from 1.9 percent registered in April.
The Bank of Japan kept its monetary stimulus unchanged on Thursday, as policymakers await to the see the full impact of the negative policy introduced early this year.
Governor Haruhiko Kuroda and his board members decided by an 8-1 majority vote to hold its target of raising the monetary base at an annual pace of about JPY 80 trillion.
The board decided by a 7-2 majority vote to maintain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank. The outcome of the meeting matched expectations.
The greenback dropped to over a 1-year low of Y103.498 against the Japanese Yen this morning, but has since bounced back to around Y104.415.
The material has been provided by InstaForex Company – www.instaforex.com