USA annualized inflation eases in June, core CPI in line

USA annualized inflation eases in June, core CPI in line

USA annualized inflation eases in June, core CPI in line

Consumer prices in the US came in unchanged in the month of June, denting expectations the Federal Reserve will again raise interest rates this year.

In Asian markets, Japan's Nikkei Stock Average fell 0.48 percent, Hong Kong's Hang Seng Index climbed 0.64 percent, China's Shanghai Composite Index fell 0.17 percent and India's BSE Sensex rose 0.18 percent.

The euro gained 0.64 per cent to US$1.468 (RM6.28). If you back out the autos and gas, then the drop was just 0.1% in June.

The Labor Department said the unchanged reading in its Consumer Price Index came as the cost of gasoline and mobile phone services declined further. MSCI's gauge of equity performance in 47 countries .MIWD00000PUS gained 0.65 percent, and its world index .WORLD rose 0.64 percent. Excluding food and energy, prices rose 0.1%. It rose as high as $1.3088 after a closely watched survey of USA consumer sentiment came in worse than forecast at 1400 GMT and was also half a percent higher at 87.63 pence per euro.

Mr Clarke said he believes CPI will exceed consensus estimates, having reached 3% in June, forcing the Bank's governor, Mark Carney, to write an official letter to the Chancellor explaining why inflation has surpassed its target by 1%.

Additionally, the Commerce Department is scheduled to release its report on business inventories in the month of May. Market participants said the lack of spending from USA shoppers made it hard to envision inflation approaching the Fed's 2% target. "Although the Fed had been expected to raise [interest] rates once more this year, a closely followed Wall Street forecasting site now puts the odds at close to zero".

All this has caused jubilation in the financial markets.

"I doubt this alone would lead to a risk-off market", said Hiroko Iwaki, senior fixed income strategist at Mizuho Securities. "Future removals of accommodation should be done in a gradual and patient manner".

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The US currency dropped 0.4 per cent to 113.46 yen, slipping from a four-month high of 114.495 yen touched on Tuesday.

EUR/USD is likely to find support at 1.1388 levels and now trading at 1.1465 levels.

The New Zealand dollar held onto its overnight gains but was headed for a 0.8 percent weekly decline as investors await several USA economic indicators, including inflation numbers.

GBP/USD is supported in the range of 1.2952 levels and now trading at 1.3101 levels.

Industrial output fell 3.6% on a monthly basis instead of 3.3% decrease estimated previously.

Data from Eurostat showed that the Eurozone trade surplus increased in May as growth in exports outpaced the rise in imports.

US 10-year yield fell to 2.303 percent, from 2.348 percent late on Thursday. The pair has made session high at 1.1469 and hit lows at 1.1431 levels.

The dollar index, was down 0.62% to 95.14 after earlier falling to 95.132, its lowest since September 2016.

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