Dollar gains broady on short covering and rising U.S. yields: Sept 14, 2017

Market Review - 13/09/2017  22:27GMT  

Dollar gains broady on short covering and rising U.S. yields

The greenback rose against majority of its peers on Wednesday as U.S. producer prices rebounded in August, albeit less-than-expected and as investors awaited the release of the country's inflation data. Continued rise in U.S. Treasury yields where benchmark 10-year yields climbed to a 2-wek high of 2.2010% boosted risk appetite for the greenback.

The Commerce Department said that producer prices increased 0.2% last month, missing the forecast for a 0.3% gain and still bouncing back from a prior 0.1% drop. Year-over-year, the producer price index (PPI) rose 2.4% in August, slightly below expectations for a gain of 2.5% but higher than the 1.9% increase in the preceding month.

Versus the Japanese yen, although dollar met renewed selling at 110.29 ahead of Asian open and retreated to session low at 109.90 in early European morning, price turned positive and rose to session highs of 110.69 in New York on the greenback's broad-based strength before easing.

The single currency traded sideways in Asia and briefly edged up to session high at 1.1995 in European morning, however, euro pared its gains and tumbled in early New York morning, price later hit session lows of 1.1874 in New York afternoon before staging a minor recovery at the close.

Although the British pound resumed its recent winning streak and rose to a fresh 1-year peak at 1.3329 in early European morning, price swiftly erased its gains on the release of soft UK average earnings data and dropped to 1.3252 in Europe. Cable then met renewed selling at 1.3290 at New York open and tumbled to 1.3227 in New York morning , however, price later hit session lows of 1.3185 in New York afternoon before recovering in tandem with the euro.

The Office for National Statistics said the average earnings index, including bonuses, rose by a seasonally adjusted 2.1% in the three months to July, missing forecasts for a 2.3% rise and compared to the previous month’s gain which was also 2.1%.

Excluding bonuses, wages rose by 2.1% in the three months to July, compared to expectations for a 2.2% gain and the prior month's 2.1% increase.

In other news, EU's Juncker said 'euro zone finance minister should be able to use all EU instruments, should be Vice President of EU commission, President of Eurogroup; we need no separate euro zone budget, but a strong euro zone budget line in common EU budget; no need for separate euro zone parliament; EU should have intelligence unit to coordinate on security, terrorism.'

Data to be released on Thursday:

Australia consume inflation expectation, unemployment rate, employment change, China retail sales, industrial output, Japan industrial output, capacity utility index change, France CPI, Swiss interest rate decision, Italy CPI, Canada new housing price, U.S. initial jobless claims, CPI, and U.K. RICS housing price balance, BoE MPC vote hike, BoE MPC vote unchanged, BoE MPC vote cut, BoE interest rate decision, BOE QE total, BoE QE corp bond purchases.