| 6/12/2008
2:50 PM: EUR/$..1.5424 $/JPY..107.86 GBP/$..1.9473
$/CHF..1.0426 AUD/$..0.9346 $/CAD..1.0223
Retail Sales Prop the
Dollar
The greenback extended its gains versus the majors,
rallying above the 108-level against the yen and
1.5380 versus the euro. The main catalyst for
today’s move was a larger than expected
improvement in May retail sales, with the headline
reading improving by 1.0%, exceeding calls for
a 0.5% increase from a 0.2% decline in April.
The excluding autos retail sales jumped to 1.2%,
versus estimates for an improvement to 0.7% from
0.5%. Weekly jobless claims crept higher to 384k,
versus 357k in the previous week while April business
inventories improved to 0.5% from 0.1% a month
earlier.
With market sentiment anticipating the FOMC to
shift to a tightening bias near the end of the
year, traders will continue to closely scrutinize
incoming US economic data. Philadelphia Fed President
Charles Plosser echoed a similar tone to recent
Fed comments, saying the FOMC needs to take preventive
measures to ensure that “inflation does
not get out of control”. Plosser said the
current risk to inflation is serious and the Fed
needs to act preemptively to contain it.
Economic data due out on Friday will provide
additional clues on how quickly the Fed may need
to move to contain inflationary pressures. The
May CPI reading is expected to edge up to 0.5%
from 0.2% a month earlier, and hold steady at
3.9% from the previous year. Core CPI is forecasted
to rise to 0.2% from 0.1% in April and remain
unchanged at 2.3% from a year earlier. Traders
will also focus on the June University of Michigan
consumer sentiment survey, which is expected to
slip further to 59.5, versus 59.8 in May –
which would be a fresh 18-year low.
Aussie Slumps on Data
The Australian dollar retreated against the greenback,
falling to 0.9330 on the heels of soft labor data.
Australia’s employment fell by 19.7k sharply
missing calls for an increase of 13.5k and posting
its first decline in 19-months. The May unemployment
rate held steady at 4.3%.
AUDUSD finds support at 0.9330, followed by 0.93
and 0.9260. Additional floors are eyed at 0.9230
and 0.92. On the upside, resistance is eyed at
0.9370, backed by 0.94 and 0.9450.
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