The US Dollar continues to grind higher.
The United States ability to fund its trade deficit received a boost yesterday in the form of the US TIC portfolio flow data for May. This release showed net demand for US portfolio securities picked up after two soft months, with overall adjusted net inflows (net of US buying overseas) rising to $56 bln from $44 bln the prior month, but with net inflows remaining sharply below levels above $80 bln observed in the first two months of the year.
On a positive note for the US dollar, inflows in May remained dominated by private sector demand, with official institutions absorbing just $13 bln or about 20% of total net inflows ($12 bln including T-bill flows).
Euro zone CPI for June was reported at a 2.1% y/y rate yesterday, in line with consensus, although the core reading retreated more than expected, falling to 1.4% y/y from 1.6% y/y.
Whilst this number on its own is unlikely to change the ECB’s current view on interest rates it does probably help to reduce the immediate pressure in terms of calls for a rate cut. Today we will get the ZEW survey of economic sentiment for Germany, another closely watched economic release
In the UK the Rightmove house price index was reported down 1% m/m yesterday, the first decline in six months. However, the RICS house price index for June was released this morning, coming out at -42 which was better than expectations of -45.
Meanwhile, the Bank of England's July meeting minutes are due tomorrow, and will be a crucial element in giving direction to the interest rate debate. Some economists believe the MPC minutes could provide some perspective of whether the question of lower rates is one of 'when' rather than 'if'. Also due this week in the UK are June retail sales and the preliminary release of Q2 GDP.
The week ahead will also see markets focus again on the outlook for Fed policy, with Chairman Greenspan delivering his semi-annual monetary policy testimony and the Fed releasing the minutes to its June 30 meeting.
While the Fed is likely to signal that tightening remains on course to continue, markets are now already pricing more rate hikes and the dollar may get further benefit if the Fed stays on message.
On a positive note for the US dollar, inflows in May remained dominated by private sector demand, with official institutions absorbing just $13 bln or about 20% of total net inflows ($12 bln including T-bill flows).
Euro zone CPI for June was reported at a 2.1% y/y rate yesterday, in line with consensus, although the core reading retreated more than expected, falling to 1.4% y/y from 1.6% y/y.
Whilst this number on its own is unlikely to change the ECB’s current view on interest rates it does probably help to reduce the immediate pressure in terms of calls for a rate cut. Today we will get the ZEW survey of economic sentiment for Germany, another closely watched economic release
In the UK the Rightmove house price index was reported down 1% m/m yesterday, the first decline in six months. However, the RICS house price index for June was released this morning, coming out at -42 which was better than expectations of -45.
Meanwhile, the Bank of England's July meeting minutes are due tomorrow, and will be a crucial element in giving direction to the interest rate debate. Some economists believe the MPC minutes could provide some perspective of whether the question of lower rates is one of 'when' rather than 'if'. Also due this week in the UK are June retail sales and the preliminary release of Q2 GDP.
The week ahead will also see markets focus again on the outlook for Fed policy, with Chairman Greenspan delivering his semi-annual monetary policy testimony and the Fed releasing the minutes to its June 30 meeting.
While the Fed is likely to signal that tightening remains on course to continue, markets are now already pricing more rate hikes and the dollar may get further benefit if the Fed stays on message.
posted by Drs Search @ 8:21 AM
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