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 U.S. 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 percent in May after surging up by 1.3 percent in April. Economists had expected sales to rise by 0.3 percent.
Reflecting another substantial increase in fuel prices, the Labor Department released a report on Tuesday showing that U.S. import prices surged up by much more than expected in the month of May. The report said import prices jumped by 1.4 percent in May after climbing by an upwardly revised 0.7 percent in April.
Economists had expected import prices to rise by 0.8 percent compared to the 0.3 percent increase originally reported for the previous month.
The Labor Department said export prices also shot up by 1.1 percent in May following a 0.5 percent advance in April. Export prices had been expected to edge up by 0.2 percent.
Business inventories in the U.S. 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 percent in April after rising by a downwardly revised 0.3 percent in March.
Economists had expected inventories to edge up by 0.2 percent compared to the 0.4 percent increase originally reported for the previous month.
The dollar climbed to over a 1-week high of $1.1189 against the Euro Tuesday, but has since eased back to around $1.1210.
Eurozone industrial production recovered at a faster than expected pace in April, Eurostat showed Tuesday. Industrial production climbed 1.1 percent in April from March when it fell by revised 0.7 percent. Production was forecast to expand 0.8 percent. 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 percent 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 European Union 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 $1.4088 from around $1.4650 a week ago.
U.K. 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 percent, the same rate as in April, data from the Office for National Statistics showed Tuesday. The figure was forecast to rise to 0.4 percent.
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 percent year-over-year in April, slower than previous month’s 8.5 percent 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 percent in April from March instead of 0.3 percent reported initially.
The material has been provided by InstaForex Company – www.instaforex.com