Sterling, Euro slump, USD/JPY soars; Equities tumble
Summary:
US Consumer Prices advanced in August to an annual 3.7%, stronger than economists expected at 3.6% and matching July’s 3.7%. On a monthly basis, US headline inflation rose to 0.3%, up from forecasts at 0.2%.
US monthly Core CPI (excluding food and energy) was unchanged at 0.3%. Claims for Unemployment benefits in the US in August were at 209,000, unchanged from July. Forecasts were for 211,000.
The Dollar Index (USD/DXY), a popular measure of the Greenback’s value against a basket of 6 major currencies, rallied to 106.57 from 105.75.
The Australian Dollar (AUD/USD) plummeted 1.59% to 0.6315 against 0.6425 yesterday, its lowest finish in 2 weeks. The Kiwi (NZD/USD) tumbled 1.4% lower to 0.5933 (0.6040).
Sterling (GBP/USD) slid to 1.2177 from 1.2277 against the broadly based stronger Greenback and following weaker-than-expected UK Industrial Production data, at -0.7% against forecasts at -0.2%.
The Euro slid back to close at 1.0530 from 1.0585 yesterday. In volatile trade, the overnight high traded was at 1.0640. Germany’s 10-year Bund yield was unchanged at 4.42%.
Against the Japanese Yen, the US Dollar soared to a 149.80 finish, not far from its overnight high at 149.83. Japan’s 10-year JGB yield eased 2 basis points to 0.75% (0.77%).
The US Dollar rose against the Asian and Emerging Market currencies (EMFX). Against the Offshore Chinese Yuan, the Greenback (USD/CNH) rose to 7.3100 (7.2865). USD/THB jumped to 36.40 (35.60).
The US 10-year bond yield rebounded to 4.70% from 4.65% while 2-year treasury yields jumped to 5.07% from 4.96%. Other global bond yields were little changed. Germany’s 10-year Bund yield climbed to 2.78% from 2.77%.
Global equity prices fell after the hot US inflation report. The data underscored the Federal Reserve’s intent to keep interest rates high and quell inflation. Risk appetite suffered.
Other economic data released yesterday saw the UK RICS House Price Index fall to -69% from -68% previously and forecasts at -60%. UK Manufacturing Production (m/m) slid to -0.8% from a downward revised -1.2% from -0.8% initially.
