#XMINDO_FX Markets - June 18 The U.S Dollar strengthened against major rivals on Tuesday, as better than expected economic data showed underlying strength in the US economy. U.S. consumer prices rose sharply in May for the second straight month and the rate of inflation over the past year reached its highest level since late 2012, an upward trend that could worry the Federal Reserve unless it abates soon. The consumer price index jumped 0.4% last month following a 0.3% gain in April, the Labor Department reported on Tuesday. The Federal Reserve has been aiming to boost inflation to around 2% or so from what it considered an economically damaging low level, but the sudden surge could set off alarm bells. The central bank might be forced to raise U.S. interest rates earlier than it planned unless the pace of inflation levels off. Building permits and housing starts data showed contraction in May. Building permits fell to 6.4% and housing starts were at -6.5%, but were largely ignored by the markets. The IMF earlier in the week called on the U.S. to raise its minimum wage, leaving Congress to set a specific level. The IMF also cut its growth forecast for the U.S. economy this year and said the Feds may have scope to keep interest rates at zero for longer than investors expect. The Washington-based IMF now sees the world’s largest economy growing 2% this year, down from an April estimate of 2.8%. The IMF left a 2015 prediction unchanged at 3%, and said it doesn’t expect the U.S. to see full employment until the end of 2017, amid low inflation. New Federal Reserve Governor Lael Brainard did not contribute to the dot plot which collects the views of all members of the central banks policy committee of where they think short-term interest rates will be at the end of 2014, 2015 and 2016. The FOMC two day monetary policy meeting concludes today, main discussions include further cuts to the US stimulus program and to set policy for interest-rate setting committee which will be on the dot plot. The Dollar Index, which tracks the performance of the U.S Dollar versus a basket of six other major currencies, was up 0.186% at 80.600. - xmindofx/market-news
Posted on: Wed, 18 Jun 2014 10:59:57 +0000
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