Yields fall after soft U.S. inflation, retail sales data

Yields fall after soft U.S. inflation, retail sales data

Yields fall after soft U.S. inflation, retail sales data

The U.S. dollar remained broadly on the back foot as traders preferred to play the risk-on trade against the yen, especially before key U.S. inflation data later today that may skew interest rate expectations in the markets. The pan-European FTSEurofirst 300 index of leading shares rebounded to rise 0.10 percent and close at 1520.41.

Lower costs for gas, airline tickets, new and used cars and wireless mobile phone plans kept USA consumer prices flat in June, evidence that inflation remains muted.

CPI is expected to rise 0.2 percent on a month-to-month basis after a 0.1 percent increase earlier month, a soft result may wane Fed rate hike speculation even more therefore burdening the U.S. dollar. The drop came after the lacklustre USA data raised doubts about United States economic growth and whether the Fed will hike rates again this year. "The prospects for a third hike in short-term interest rates this year continue to dim".

It would leave inflation at a near four-year high, as the last time inflation reached 2.9% was June 2013. Economists are expecting a quarterly rise of 0.2 percent for annual inflation to be running at 1.9 percent.

The dollar index, which tracks the greenback against six major rivals, was down 0.5 per cent to 95.248 after earlier falling to 95.186, its lowest since September 2016.

The move would make Canada the first to follow the U.S. Federal Reserve in removing the monetary stimulus poured into the global economy, with the European Central Bank and the Bank of England also seen moving in that direction in coming months.

Following a particularly quiet week on the stats front out of the U.S, there's finally some stats for the markets to consider this afternoon, with June's retail sales and inflation figures scheduled for release. The NT dollar this week rose 0.6 percent against the greenback from NT$30.610 on July 7. But excluding vehicle sales and gasoline, retail sales still contracted by 0.1 percent.

The latest batch of soft inflation data come amid a second day of testimony from Fed chair Janet Yellen, which was mainly focused on regulatory issues, but Yellen did mention there weren't any signs the current economic expansion will come to end soon.

The Dow Jones Industrial Average rose 84.65 points, or 0.39 percent, to 21,637.74.

Gold prices jumped 1.4 percent to the highest level in almost two weeks on Friday after data pointed to weak USA inflation, reaffirming doubts that the US central bank would again hike interest rates this year. West Texas Intermediate (WTI) crude futures settled up 46 cents, or 1 percent, at $46.54 per barrel.

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