Both the US inflation and retail sales figure smashed expectations yesterday; the former came in at 0.6%, double what was forecast, while the latter slipped to 0.4%, a decent chunk higher than the 0.1% estimated. Things were a bit more mixed elsewhere, with a 29-month high Empire State manufacturing index reading countered by a dip into negative territory for the industrial production rate.
However, the markets were largely only interested in those first 2 figures, and what it might mean for the Federal Reserve going forwards. In her testimony in front of the Senate Banking Committee on Tuesday Janet Yellen expressed an openness to raising rates, a position the central bank may find itself closer to following yesterday’s data. And while the unpredictability of Trump complicates matters somewhat, investors made their feelings clear, sending the dollar between 0.3% and 0.4% higher against the pound, euro and yen.
LCG Analyst, Ipek Ozkardeskaya suggested, “the appetite for the US dollar is expected to remain firm in mid-term; pullbacks could be interesting opportunities for greenback lovers to strengthen their position.
In focus today
After the UK data drama of the past 2 days things look a bit duller this Thursday morning, with the markets reversing some of yesterday’s movement.
The FTSE fell around 20 points this morning after the bell, taking the index back under the 7300 it has been flirting with for much of the week. A splash of red across the oil and mining sectors has been the main catalyst for the drop, though the pound’s early gains haven’t helped either.
Sterling rose 0.4% against the dollar, pushing it back towards 1.25, though could only sit flat against the euro, flitting about the 1.175 mark. The UK doesn’t really have anything new to process this Thursday, so investors will likely to continue to trade in the light of those inflation and wage growth readings from Tuesday and Wednesday respectively.
On a light day for macro data, the main focus will most likely be the plethora of European speakers at the meeting of G20 Foreign Ministers in Berlin. The latter will likely provide an ongoing commentary throughout the day concerning recent major geopolitical events – North Korea, Brexit and Trump – as the trio of Boris Johnson (UK), Rex Tillerson (US) and Russian counterpart Sergey Lavrov meet for the first time.
US Initial Jobless Claims is the only data release that stands out in today’s economic calendar, but is unlikely to change the overall bullish picture of the US labor market at this point. Charter Communications Inc. and Duke Energy Corporation are the stocks to watch today as they are releasing their earnings’ reports.