The pair has made session high at 1.1320 and hit lows at 1.1244 levels.
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United States industrial production increased 0.7 per cent in July, better than expectations of 0.3 per cent, after moving up 0.4 per cent in June, said the Federal Reserve on Tuesday.
As June’s shock United Kingdom vote to leave the European Union fades with little lasting effect on markets, the USA economy is bouncing back from a meager 1.0 percent growth rate in the first six months of the year.
“The Fed is using the dollar as sort of a tool of monetary policy”, he said.
USA consumer prices were unchanged in July as the cost of petrol fell for the first time in five months and underlying inflation moderated, while U.S. housing starts unexpectedly climbed and industrial production rose more than forecast in the same month. The dollar briefly weakened below the 100 yen mark before settling 100.35, almost one per cent down from opening. Further weakness may take the greenback to a support around the 1.27 level. The metal was also helped by lower European shares, which pulled back from seven-week highs.
Investors have turned their focus to inflation data from the Commerce Department, which is expected later this morning. Core inflation, which leaves out food and fuel prices, inched up just 0.1 percent for the month. “So far we seem to be on that trajectory and we’ll have to see how it plays out in coming months”, he said.
OTHER ENERGY TRADING: Wholesale gasoline rose 2 cents to $1.42 a gallon. AUD/USD changed hands at 0.7698, up 0.05%.
US stocks eased from record highs on Tuesday, Aug. 16, after comments from Federal Reserve officials fueled speculation of an interest rate hike this year.
CURRENCIES: The dollar fell to 99.93 yen from 101.21 yen and the euro rose to $1.1293 from $1.1183. The Federal Open Market Committee left interest rates unchanged when it met last month, but said in a post-meeting statement that “near-term risks to the economic outlook have diminished”.
Investors will pore over the minutes of the Fed’s July policy meeting, scheduled for release on Wednesday, for clues on the central bank’s rate plans after a blowout June jobs data. Oil prices slumped from their five week high, while at home things do not appear encouraging with wholesale price inflation jumping over 23-month high.
Analysts said Williams’ comments dented market expectation of an interest-rate hike soon this year. Brent crude futures were trading at $48.92 per barrel, down 31 cents from their last settlement.
The dollar index was down 0.6 percent to $95.091 against a basket of currencies. That demand is spilling over to the USA, where Treasury yields are higher than in Japan, Germany and the United Kingdom.
The CAC 40 in France shed 0.8% and Britain’s FTSE 100 lost 0.7%.
“Overall, these factors suggest the outlook for the US industrial sector has improved modestly and support our expectation of healthier economic growth in the second half of 2016”, said Jesse Hurwitz, an economist at Barclays (LSE: BARC.L – news) in NY.
Having struck near 31-year lows earlier in the week, sterling traded nearly unchanged at $1.3028 GBP=D4 following a 1.3 percent rise overnight due to slightly higher than expected United Kingdom inflation data. Dow and S&P 500 futures were both down 0.1 percent. Brent crude, a benchmark used to price worldwide oils, lost 33 cents at $48.02 a barrel in London. It rose more after settlement, reaching $49.34, its highest since July 7.
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OIL: Benchmark U.S. crude shed 29 cents at $45.45 per barrel in NY. This is the highest close for either contract since mid July. The weakening dollar continued to boost materials companies Tuesday, as it could make their products more affordable in markets outside the U.S. Packaging maker WestRock rose 85 cents, or 1.9 percent, to $44.85.
