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Mixed Economic Data Keeps Greenback Range Bound Against Rivals

Lower than anticipated JOLTS job openings, weak PPI data, and a rise in unemployment claims has turned the greenback weak against its rivals. A Bloomberg report revealing Chinese officials’ recommendation to their government to trim down Treasury purchases has also aided the weakness in the US dollar. The inflation data, reported on Friday, was better than market’s expectations. However, poor retail sales data dampened the sentiment towards the US dollar.

The US Bureau of Labor Statistics reported a 0.3% gain in the inflation rate in December, on a m-o-m basis. It is a notch higher than the 0.2% growth anticipated by analysts. In the previous month, the consumer price index for all urban consumers rose 0.1%. In the past 12-months, the all items index rose 2.1% before seasonal adjustment.

Excluding food and energy, core retail sales increased 0.4% m-o-m in December, and beat analysts’ expectations of a 0.3% rise. However, it was way below the 1.3% increase registered in November. Along with the shelter index, the indexes for medical care, used cars and trucks, new vehicles, and motor vehicle insurance were among those that increased in December. The indexes for apparel, airline fares, and tobacco declined over the month.

The all items index rose 2.1% for the 12 months ending December, compared to 2.2% for the 12 months ending November. The index for all items less food and energy increased 1.8% over the last year. The food index rose 1.6% over the past year. The index for energy increased 6.9%, with all of its major component indexes rising during 2017.

Financial Times

The jubilant mood created by the better-than-expected inflation data was offset by the weak retail sales growth of only 0.4% in December. In November, the retail sales had increased by an upwardly revised 0.9%. The figures reported by the Commerce Department were also lower than the 0.5% growth expected by analysts.

Economists anticipate a modest lift in consumer spending due to the successful tax reform bill passed by the Trump administration last month. However, a series of upbeat data can only turn the sentiment bullish towards the greenback. For most part of this week, I expect the greenback to remain range bound against the G10 currencies.

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