US Import Prices Rise the Most in Four Years

Daily Analysis - 15/06/2016

US Import Prices Rise the Most in Four Years

Import prices in the US have risen for three month consecutive months, suggesting that underlying inflation is likely to firm in the coming months. Although up 1.40% on the month, import prices are still down -5.00% from a year ago. Rising oil prices were seen adding to the gains.

Japan Industrial Production Rises in April

Industrial production in Japan increased more than forecasted in April, data from the Ministry of Economy, Trade and Industry showed on Tuesday. Industrial production edged higher, rising 0.50% in April, which was more than the preliminary estimates of 0.30%. Analysts were looking for an increase to 0.40%. Despite the modest revision to industrial production, it was still lower than the 3.80% increase seen in March. Shipments numbers were revised higher to 1.60% from 1.50% but inventories fell -1.70% on the month. On an annualized basis, Japan's industrial production is down -3.30% in April, slightly better than the previous estimates of -3.50%.

UK CPI Rises 0.20% in May

Consumer prices in the UK inched higher, rising 0.20% on a month over month basis in May. On a year over year basis, headline inflation increased 0.30%, rising at the same pace as in April. Core CPI which excludes volatile food and energy prices grew 1.20%, data from the UK's Office for National Statistics showed. Analysts were expecting to see an increase to 0.40% on the headline CPI and 1.30% on the Core CPI on a yearly basis. Inflation in the UK has slipped in April, following March's increase to 0.50% on the back of the Easter holidays which saw airfares and travel surging. For May, clothing, footwear and food prices dragged inflation lower while transportation costs, restaurant and hotels and telecommunication services managed to contribute to the upside.

US Retail Sales Beats Forecasts

Retail sales for the month of May were higher than forecasts, rising 0.50% on a month over month basis in May, while rising 0.40% on the core. Analysts expected to see retail sales to slowdown 0.30% on the headline and the core. Excluding autos, retail sales increased 0.40%. There were no revisions to the previous month's data which sent the US dollar higher. US retail sales now post a second consecutive month of gains pointing to a strong start in the second quarter. The gains in retails sales came with a 1.30% increase in non-store sales including online purchases, which is now 12.20% higher on the year.

US Economic Data Weighs on the Dollar

The economic calendar today is busy with lot of data coming from the US. Empire state manufacturing data is due at 12:30 GMT and is expected to show a moderation in the index to -4 after falling to -9.02 in May. PPI numbers will also be coming out at the same time with the core PPI expected to rise 0.10% on the month, unchanged from April, while the headline PPI is expected to slip 0.10% on a year over year basis after staying flat in April. Industrial production numbers are also expected to fall 0.10% on the month in May. At 1800, the markets will gear up for the FOMC rate statement and economic projections, which will later be followed by a press conference from Janet Yellen.