Dollar falls broadly on profit taking despite milldly upbeat U.S. inflation data: Sept 15, 2017

Market Review - 15/09/2017  02:53GMT 

Dollar falls broadly on profit taking despite milldly upbeat U.S. inflation data

Despite continuing this week's winning streak and rallying across the board on Thursday on the back of mildly upbeat U.S. inflation report, the greenback quickly pared intra-day gains and fell on profit taking as geopolitical concerns lingered.  

In a report, the U.S. Commerce Department said that consumer prices rose 0.4% in August from a month earlier, compared to forecasts for 0.3% increase and a 0.1% gain in the prior month. Year-over-year, consumer prices increased 1.9% last month, above forecasts for a 1.6% increase and compared to the 1.7% advance seen in July.  

Consumer prices, excluding food and energy costs, increased by a seasonally adjusted 0.2% last month, in line with consensus and compared to July's 0.1% advance. Core CPI increased at an annualized rate of 1.7% in August, in line with the previous month's increase but above the consensus estimate for a 1.6% rise.  

Versus the Japanese yen, although dollar briefly edged up to 110.73 in Asian morning, price weakened to 110.35 in European morning. Later, the greenback jumped to a 1-month high at 111.04 at New York open on the back of mildly upbeat U.S. inflation data, however, the pair swiftly pared its gains and tumbled to session lows of 110.07 near New York close.  

The single currency resumed this week's decline and remained on the back foot in Asia, price fell to 1.1867 ahead of European open. Despite staging a rebound to 1.1910 in early Europe, euro met renewed selling there and spiked to a 2-week bottom at 1.1839 at New York open after U.S. inflation data before recovering strongly on short covering, price later climbed to session highs of 1.1921 near the close.  

The British pound was the star performer versus the usd. Price edged up to 1.3225 in early European morning before spiking to session low at 1.3148 after MPC kept interest rate unchanged. However, sterling jumped after the release of hawkish Bank of England MPC statement and hit 1.3373 at New York open, cable later ratcheted higher to a fresh 1-year peak at 1.3407 in New York afternoon on the back of Governor Carney's comments.  

Bank of England policymakers said their first interest rate rise in more than a decade was likely to be needed in the "coming months" if the economy keeps growing and inflationary pressures continue to build.  

BoE's Carney said 'price rises have been entirely result of falling sterling due to Brexit; he sees shift in balancing act for BoE; we will take decision on rates based on data; possibility of a rate hike has definitely increased; talking about a modest adjustment in interest rates.'  

In other news, North Korean state agency threatened on Thursday to use nuclear weapons to "sink" Japan and reduce the United States to "ashes and darkness" for supporting a U.N. Security Council resolution and sanctions over its latest nuclear test.  

On the data front, the number of individuals filing for initial jobless benefits in the week ending September 9 fell by 14,000 to a seasonally adjusted 284,000 the Labor Department said. Analysts had expected claims to rise to 300,000 last week.  

Data to be released on Friday: 

New Zealand manufacturing PMI,Germany wholesale price index, EU trade balance, and U.S. NY Fed manufacturing, retail sales, industrial output, capacity utilization, manufacturing output, business inventories, U. of Michigan sentiment. 

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