Consumer Prices Unchanged in June

Consumer Prices Unchanged in June

United States consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation and soft domestic demand that diminished prospects of a third interest rate increase from the Federal Reserve this year.

Headline inflation is also showing in decline after a steep rally, as shown in the 5-year historical chart for headline inflation - which includes energy and food inflation - below. That was below the 0.1% gain expected by economists.

The Consumer Price Index (CPI) measure of inflation is forecast to come in at 2.9% in June, according to consensus estimates, in line with May's figure but above April's reading of 2.7%.

Reaction was largely muted to a story by Politico that Trump is increasingly unlikely to nominate Yellen next year for a second term, and National Economic Council Director Gary Cohn is the leading candidate to succeed her. Manufacturing output rose 0.2%.

The University of MI is due to release its preliminary report on consumer sentiment in the month of July.

Additionally, the Commerce Department is scheduled to release its report on business inventories in the month of May.

The Fed's preferred measure of inflation has been slipping.   Andy Kiersz  Business Insider
The Fed's preferred measure of inflation has been slipping. Andy Kiersz Business Insider

The latest data is likely to trigger fresh doubts surrounding the inflation outlook and create renewed uncertainty surrounding potential further rate increases, although the Fed will see the steady rate of services-sector inflation as justifying their policy.

FED WATCH: Yellen rehashed her key message in her comments to Congress on Thursday, speaking of challenge posed by the dual risks of inflation: prices rising too slowly and prices accelerating too quickly.

There appears to be no sign of the downtrend in inflation slowing, much less reversing. "Future removals of accommodation should be done in a gradual and patient manner". Against the yen, the greenback rose.

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

On a month-on-month basis, the core CPI is expected to rise 0.2 percent after a 0.1 percent gain the previous month.

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

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Final data from the Ministry of Economy, Trade and Industry showed that Japan's industrial production declined more than estimated in May. It rose as high as $1.3088 after a closely watched survey of US consumer sentiment came in worse than forecast at 1400 GMT and was also half a percent higher at 87.63 pence per euro.

The Fed has a 2 per cent inflation target and tracks a measure which is now at 1.4 per cent.

The trade surplus increased to a seasonally adjusted Euro 19.7 billion in May from Euro 18.6 billion in April.

Drugmaker AstraZeneca AZN.L continued Thursday's slide, down 1.6 percent due to uncertainty around reports that CEO Pascal Soriot was preparing to leave the company. Platinum and palladium advanced 1.5% and 0.6%, respectively.

USD/CAD is supported at 1.2614 levels and is trading at 1.2649 levels. WTI crude traded 0.67% higher on Friday morning at $46.40/bbl, after falling as low as $42.50/bbl just three weeks ago.

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