The US dollar strengthened for the second day against a basket of currencies after a positive jobless claims report. Initial claims last week fell to 381,000 from 386,000 the week earlier but on average the indicator is rising.
The euro weakened against the dollar after comments from the chairman of euro finance ministers, Juncker. “High euro zone inflation is a worry for governments in the region as well as the European central bank and governments too must fight it”. Inflation is at a record high 3.7% year over year which is almost double the target of 2.0%.
Sterling rallied against the dollar after a surprise spike in retail sales. Year to date sales rose 8.1%, the strongest level since April 2002. Retail sales last month rose 3.5% versus expectations of a -0.1% fall. This is a glimmer of hope in the otherwise sagging UK economy. Investors are still pricing in a lower than 50% chance the central bank will raise rates in the short term.
The Japanese yen traded slightly weaker but off its weekly high after a survey showed business pessimism is spreading from the manufacturing sector to the country's service sector. Businesses cite the cause is due to a weakening domestic demand caused by rising raw material costs. The worsening outlook is likely to keep interest rates on hold at 0.50%.
The Canadian dollar rose to its highest point in 2 weeks after a higher than expected CPI reading dampened expectations the BoC would cut rates. CPI rose 2.2% from 1.7% a month earlier. Looking further into the report, gasoline prices were pushed up 15% from last month alone.
The euro weakened against the dollar after comments from the chairman of euro finance ministers, Juncker. “High euro zone inflation is a worry for governments in the region as well as the European central bank and governments too must fight it”. Inflation is at a record high 3.7% year over year which is almost double the target of 2.0%.
Sterling rallied against the dollar after a surprise spike in retail sales. Year to date sales rose 8.1%, the strongest level since April 2002. Retail sales last month rose 3.5% versus expectations of a -0.1% fall. This is a glimmer of hope in the otherwise sagging UK economy. Investors are still pricing in a lower than 50% chance the central bank will raise rates in the short term.
The Japanese yen traded slightly weaker but off its weekly high after a survey showed business pessimism is spreading from the manufacturing sector to the country's service sector. Businesses cite the cause is due to a weakening domestic demand caused by rising raw material costs. The worsening outlook is likely to keep interest rates on hold at 0.50%.
The Canadian dollar rose to its highest point in 2 weeks after a higher than expected CPI reading dampened expectations the BoC would cut rates. CPI rose 2.2% from 1.7% a month earlier. Looking further into the report, gasoline prices were pushed up 15% from last month alone.