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USD Weakens on Disappointing Inflation Data; GBP Shows Recovery from Brexit Woes

Published October 13, 2017
  • The US dollar moved near two-week lows this morning, following a release of weaker than expected data on US inflation. This dampens prospects for the US economy while creating uncertainty over the potential US interest rate hike in December.
  • US Consumer Inflation showed a reading of 0.5% versus expectations of 0.6%; the core iteration of this data (consumer prices not including food and energy) came in at 0.1% versus expectations of 0.2%.
  • US month-on-month retail sales fell with a reading of 1.6% versus growth expectations of 1.7%; the core version (excluding automobile and gas sales) grew with a 0.5% reading against expectations of 0.4%.
  • The Great British Pound rose to a 2-week high today, erasing sharp losses, after a German newspaper reported that the UK could stay in the European Union for another two years; GBP fell earlier this week after EU chief negotiator Michel Barnier announced that Brexit talks were at an “impasse”.
  • The UK has yet to indicate how much the country would be willing to pay the European Union in exit fees; for now, reports suggest that the European Union’s offer is tied to the UK meeting all of its obligations as an EU member, however, without any of the voting rights.
  • Oil prices moved higher this morning after news of a third consecutive week of declines in US crude stockpiles showed new signs that the oil market is re-balancing. A monthly report from OPEC also indicated the global oil demand will rise around by 30,000 barrels a day for this year and 2018.