Published: Sat, July 15, 2017
Markets | By Noel Gibbs

Fed: US growth solid, yet not fast enough to accelerate pay

Fed: US growth solid, yet not fast enough to accelerate pay

USA consumer prices were unchanged in June compared with an expected gain of 0.1% for the month and the year-on-year rate declined to 1.6% from 1.9% and compared with an expected rate of 1.7%.

CPI is expected to rise 0.2 percent on a month-to-month basis after a 0.1 percent increase earlier month, a soft result may wane Fed rate hike speculation even more therefore burdening the U.S. dollar.

In a separate report, the Commerce Department said retail sales fell 0.2 per cent last month, weighed down by declines in receipts at service stations, clothing stores and supermarkets. "We remain of the view that a clear rebound in the official data is due but our patience is being tested", he said in a note to clients.

Yellen said hitting 3 percent growth in the next five years "would be wonderful".

Regarding the reaction in the forex markets, the dollar index, which gauges the dollar's strength against major rival currencies, fell sharply by 0.50%, reaching a new nine-month low of 95.30.

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Fed policymakers have lifted their benchmark short-term rate four times in the past 18 months.

While prices have backtracked a bit in recent months, the economy is still operating with tight labor markets, she said. For the week, the Australian dollar and the Canadian dollar are among the top gainers after European shares were poised to post their best week since late April. Many economists believe the Fed will raise rates one more time this year, in either September or December. Rental costs rose, with owners' equivalent rent of primary residence increasing 0.3 per cent after advancing 0.2 per cent in May. The S&P 500 .SPX gained 11.44 points, or 0.47 percent, to 2,459.27 and the Nasdaq Composite .IXIC added 38.03 points, or 0.61 percent, to 6,312.47.

The energy index decreased 1.6% in June, led by the fuel oil index falling 3.7%.

"This cements the weaker trend in the dollar and lower US yields and I think this story has got legs", he said.

US Treasuries yields stayed below their recent peaks, with the 10-year yield at 2.352 per cent compared with 2.398 per cent marked on Friday, its loftiest level in nearly two months. "After their June rate hike, the Fed is seen watching inflation trends carefully before tightening policy again". It earlier fell to 2.279 percent, its lowest since June 30.

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Gold was flat on Friday at $1,217.59 an ounce, heading for a 0.4 percent gain for the week. The contract finished the week up 1.5 percent, its first gain in six weeks.

Brent crude futures, the worldwide benchmark for oil, settled up 49 cents at US$48.91 per barrel. It was poised for a weekly gain of 1.3 percent, the biggest since mid-May.

Oil rose 1 percent on Friday, boosted by lower US stockpiles, a slight slowdown in USA crude production and signs of increased Chinese demand, but trading was volatile as global supply remained strong.

US West Texas Intermediate (WTI) crude futures rose 46 cents to settle at US$46.54 per barrel.

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