Dollar falls broadly in New York trading on further long usd liquidation due to market expectation of Fed's rate cuts

Market Review - 13/07/2019  05:43GMT  

Dollar falls broadly in New York trading on further long usd liquidation due to market expectation of Fed's rate cuts

Dollar ended lower against majority of its peers on Friday as expectations that the Federal Reserve will cut its rate at their next meeting in July continued to weigh on the greenback.  
Reuters reported lower interest rates may be needed to help lift inflation and bolster the Fed's credibility in meeting an inflation target it has consistently underrun, Chicago Federal Reserve president Charles Evans said on Friday.  "I am nervous about inflation," Evans said, adding he felt that "a couple of" rate cuts would help lift inflation above the 2 percent target by around 2021, and show that the Fed was willing to balance its years of low inflation with a slightly higher pace of price increases.  
  
Versus the Japanese yen, although price initially recovered to session highs at 108.61 at Asian open, the pair quickly retreated and fell to 108.25 in European morning. Dollar then met renewed selling at 108.47 and dropped to 107.96 in New York morning on usd's broad-based weakness together with cross-buying in jpy. Later, the pair hit a fresh low for the week at 107.81 in New York afternoon.  
  
The single currency rebounded from 1.1250 in Asia to session highs of 1.1275 ahead of European open, however, price erased intra-day gain and remained on the back foot in European morning dur to active cross-selling of euro va yen, sterling and the Swiss franc. Price dropped to 1.1239 at New York open and later ratcheted higher due to renewed usd's weakness and climbed back to 1.1274 in New York afternoon.  
  
The British pound traded with a firm bias in Asia and rebounded to 1.2553 in European morning before retreating in tandem with the euro. However, cable found renewed buying at 1.2522 later climbed to session highs of 1.2580 at the close in New York on usd's weakness.  
  
On the data front, Reuters reported U.S. producer prices rose slightly in June as the cost of energy and other goods fell for a second straight month, offsetting an acceleration in services, leading to the smallest annual increase in producer inflation in nearly 2-1/2 years.  The Labor Department said on Friday its producer price index for final demand edged up 0.1% last month after a similar gain in May. In the 12 months through June, the PPI rose 1.7%, the smallest gain since January 2017, slowing further from a 1.8% increase in May.  Economists polled by Reuters had forecast the PPI unchanged in June and increasing 1.6% on a year-on-year basis.  
  
  
Data to be released later this week :  
  
Japan market holiday, UK Rightmove house prices, China retail sales, industrial production, GDP, Swiss PPI and U.S. NY manufacturing index on Monday.  
  
New Zealand CPI, Italy trade balance, CPI, UK claimant count, ILO unemployment rate, average earnings, EU trade balance, ZEW economic sentiment, Germany ZEW economic sentiment, current situation, U.S. retail sales, export price, import price, redbook retail sales, industrial production, capacity utilisation, business inventories and NAHB housing index on Tuesday.  
  
Australia leading index, Italy industrial orders, industrial sales, UK DCLG house price index, CPI, RPI, PPI output, PPI input, EU CPI, core CPI, construction output, U.S. MBA mortgage applications, housing starts, building permits and Canada CPI, core CPI on Wednesday.  
  
Japan imports, exports, trade balance, Australia employment change, unemployment rate, Swiss imports, exports, trade balance, UK retail sales, core retail sales, U.S. jobless claims and Philadelphia Fed manufacturing index on Thursday.  
  
Japan CPI, core CPI, Germany PPI, EU current account, UK PSNB, Canada retail sales and U.S. Michigan consumer sentiment on Friday.