Forexlive Americas FX news wrap: US CPI disappoints and so does the BOE
Forex news for NY trading on May 10, 2018.
- S&P closes above its 100 day MA and 2018 midpoint
- Reuters: US is said to set May 17 or 18 for NAFTA deadline
- US monthly budget for April $214.3B vs $212.0B
- US treasury auctions $17B of 30 year bonds at a yield at 3.13%
- Commerce Sec Ross sees a reasonable chance of tariff deal with EU
- BOE's Carney says he expects a rate hike this year if there are no economic shocks
- Trump will meet Kim Jong Un in Singapore on June 12
- Canada New Housing Price Index M/M 0.0% vs 0.0% expected
- US May initial jobless claims 211k vs 219k expected
- US April CPI +2.5% vs +2.5% y/y expected
- BOE presser summary
- BOE: rates unchanged, vote the same, pound falls initially
In other markets at the day's close:
- Spot gold $1321.22, of $8.46 or 0.65%
- WTI crude oil futures up $.24 or 0.34% at $71.38
- S&P index rose 0.94%
- NASDAQ rose 0.89%
- Dow industrial average rose 0.80%
- 2 year 2.53%, unchanged. 10 year 2.964%, -4 basis points. 30 year 3.11%, -5.2 basis points
- Bitcoin on Coinbase is trading down $138 to $9,105. The 100 day moving average comes in at $8844. The 200 day moving average is up at $10,157. The current price trades between the 2 key moving averages.
The US CPI data disappointed. The MoM rose by 0.2% versus 0.3% expectations. Excluding food and energy was also lower than expected at 0.1% versus 0.2%. The YoY core CPI came in at 2.1% vs 2.2% expected. Prices remains higher but contained and is certainly not running away and should keep the path of Fed tightenings gradual in 2018.
What is a risk to inflation is the labor market. I know last week the US employment NFP job growth was less than expectations, however, the initial jobless claims remain at/near all-time low levels. For the current week, they totaled 211K. That was lower than the 219K estimate. The 4 week moving average declined to 216K from 221.5K last week. That is the lowest reading on record. If inflation is to raise its ugly head, it would likely be helped by rising wages.
I guess I should say oil prices might also have a say in future inflation as it closed higher again today and is comfortably above the $71 level at $71.38 in after hours trading.
Also in the US today, US stocks moved higher with the S&P closing above its 100 day MA for the first time since April 18th. That MA comes in at 2706, and if the price can stay above tomorrow (and advance), it would give the bulls more to cheer.
In the US debt market, the May refunding was completed today with a "good" 30 year auction. The yield came in at 3.13%, with bid to cover at the 6 month average of 2.41. Good not great but ok.
The USD was mostly lower today with declines against all the currencies with the exception of the GBP.
Speaking of the GBP, it suffered today on the BOE decision and thoughts that the tightenings are on hold.