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10.06.2016 18:18

American focus: The US dollar strengthened against most major currencies

The US dollar rose modestly against the euro, continuing yesterday's trend. Increased demand for the US currency due to the fall in bond yields in Europe and Japan. Additional support for the dollar was data on consumer sentiment. Preliminary results of studies presented Thomson-Reuters and Institute of Michigan, showed in June, American consumers feel almost as optimistic about the economy, as in the previous month. According to reports, in June consumer sentiment index fell to 94.3 points compared with a final reading of 94.7 points in May. According to average estimates, the index was 94.0 points to make. In addition, the report stated that the index 5-year inflation expectations in June was + 2.3% and the 12-month inflation expectations were at 2.4%.

Investors are also waiting for the Fed meeting, which will take place next week. Despite the fact that the probability of a rate hike in June has fallen to almost zero, the accompanying statement may contain hints of the timing of the next increase. Recently, Federal Reserve Chairman Yellen said the US central bank does not intend to raise interest rates, while keeping the uncertain economic outlook in the United States. Yellen also expects the US recovery will continue, but did not specify the possible timing of the next rate hike. Today

futures on interest rates Fed indicate that the probability of a rate hike of 2% in June. The chances of an increase in rates are estimated at 23% in July.

The British pound dropped significantly against the dollar, reaching the lowest level since April 14, which was conditioned by the increased concern about the possibility of the UK from the EU structure. Sharp fluctuations in the pound are also associated with low liquidity, which is partly caused by the uncertainty in the run-up to the referendum.

The results of the latest public opinion poll conducted by the newspaper The Independent, revealed that the share of the UK release of adherents from the EU was 55%, while the number of speakers for the preservation of the country in the EU has been at the level of 45%.

Earlier today, investors pay attention to the results of research by the Bank of England and to TNS, which showed that the average expectations of inflation over the next year amounted to 2.0 percent compared to 1.8 percent in February. Five-year inflation expectations rose to 3.4 percent from 2.9 percent. The respondents said that the current inflation rate of 2.2 percent compared to 2.0 percent in February. Recent data from the ONS showed that annual inflation slowed to 0.3 percent in April compared with 0.5 percent in March. The latest report on inflation the Bank of England said that inflation is projected to grow steadily over the next months and will reach 0.9 percent in September. The survey also showed that 41 percent of respondents expect that interest rates will rise over the next 12 months compared to 38 percent in February.

The Canadian dollar rose sharply against the US dollar, supported by strong data on the labor market, but then lost all the positions on the background of falling oil prices. The Statistical Office of Canada reported that employment changed little in May (14,000 or 0.1%). Given the fact that fewer people were looking for work, the unemployment rate fell by 0.2 percentage points to 6.9%, the lowest since July 2015. Full employment increased by 61,000 in May. This increase was largely offset by a decrease of 47 000 for part-time work. During the 12 months to May, employment increased by 109,000, or 0.6%, the result of growth in full-time. During the same period, the number of hours worked increased by 0.8%. In May, employment increased for both men and women aged 55 years and older, while it has fallen for young people aged 15 to 24. The number of public sector employees has increased in May, while there was little change among private sector employees and the self-employed.

Market Focus

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  • Earnings Season in U.S.: Major Reports of the Week
  • German private sector output growth slowed for the second month running in July
  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
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