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Euro Area Inflation Hits 2%; Yen Gains on Signs of Economic Stress

Published June 29, 2018
  • Immigration took center stage at the Brussels Summit as the leaders of the EU member states plan to boost defense cooperation, amid increasing doubts over President Donald Trump’s commitment to the continent’s security. The talks also resulted in a fresh warning that any increase in US tariffs on car imports would be met with an unwavering EU response.
  • Euro area inflation hit 2% in June, effectively reaching the European Central Bank’s target level for the first time in a year. Core inflation, the key warning sign as to whether the rise is a sustainable adjustment or not, slipped to 1% for the month.
  • Expectations are set for a steady 0.4% increase in US personal income in May and for personal spending, as analysts forecast a solid 0.5% increase after a 0.6% increase in April. The momentum in personal spending in Q2 and a robust increase in May will be anticipated to confirm these expectations. With the continued increases in retail gasoline prices in May, much of the spending has been concentrated on gasoline and other energy goods.
  • Japan’s industrial output fell in May from a month earlier, marking the first decline in four months. The industrial output in May declined 0.2 percent from the previous month, with the seasonally adjusted index of output at factories and mines standing at 104.4 against the base of 100 for 2010.
  • The dollar rose to 110.68 yen, having made gains for the last three sessions and nearing this month’s high of 110.90, helped by seasonal buying at the end of quarter. The yen, which tends to be bought on signs of economic stress because of expectations of Japanese asset repatriation, also lost some support after US President Donald Trump indicated he would take a softer approach on Chinese investments in US technology companies.