Dollar Weakening As Investors Await Yellen Testimony
February 09 2016 - 9:10AM
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The dollar is losing ground against all its major rivals Tuesday
afternoon. Continued concerns over global growth prospects continue
to drive trading action, as economic data remains on the light
side.
Investors are looking forward to 2 days of testimony by Fed
Chair Janet Yellen before Congress tomorrow and Thursday. Yellen's
statement and her responses to questions will be highly scrutinized
for clues regarding future Fed rate hikes.
With a drop in inventories of durable goods more than offsetting
an uptick in inventories of non-durable goods, the Commerce
Department released a report on Tuesday showing a modest decrease
in U.S. wholesale inventories in the month of December.
The report said wholesale inventories edged down by 0.1 percent
in December after sliding by a revised 0.4 percent in November. The
modest drop in inventories matched economist estimates.
The dollar dropped to over a 3-month low of $1.1337 against the
Euro Tuesday, but has since rebounded to around $1.1295.
Germany's industrial production dropped unexpectedly in
December, figures published by Destatis revealed Tuesday.
Industrial production fell 1.2 percent from November, confounding
expectations for an increase of 0.5 percent. This was the second
consecutive fall in production. Output had decreased 0.1 percent in
November.
German exports and imports set new highs in 2015, leading to the
biggest ever trade surplus, preliminary data from Destatis showed
Tuesday.
Exports rose 6.4 percent to EUR 1,195.8 billion and imports
increased 4.2 percent to EUR 948.0 billion. The trade surplus grew
to a record EUR 247.8 billion from the previous peak of EUR 213.6
billion.
The UK central bank should take action to tackle risks to
financial stability sooner than later if lending starts to grow
faster than national output, Bank of England Deputy Governor Jon
Cunliffe said Tuesday.
"Given the vulnerability that already exists and the powerful
drivers in the UK, particularly the housing market, if credit began
again to grow faster than GDP, I would want to think about action
to manage the financial stability risks sooner rather than later,"
Cunliffe said in a speech at a British Property Federation
conference in London.
The household debt situation has become sustainable after a
correction since the financial crisis, the policymaker noted.
"Household balance sheets, however, remain large by historic
standards," Cunliffe said. "The position is sensitive to the
unwinding, were it to occur, of some of the forces that pushed
rates down over the past 40 years."
The buck slipped to a low of $1.4515 against the pound sterling
Tuesday, but has since risen back to around $1.4450.
The U.K. merchandise trade deficit narrowed in December despite
exports falling for the third straight month, suggesting that weak
trade dragged economic growth at the end of 2015. The visible trade
deficit decreased to GBP 9.9 billion from GBP 11.5 billion in
November, preliminary data from the Office for National Statistics
showed Tuesday.
Economists had forecast a shortfall of GBP 10.4 billion in
December. A year ago, the deficit was GBP 13.5 billion.
Like-for-like sales in the United Kingdom spiked 2.6 percent on
year in January, the British Retail Consortium said on Tuesday.
That shattered forecasts for an increase of 0.3 percent following
the 0.1 percent gain in December.
The greenback fell to over a 1-year low of Y114.184 against the
Japanese Yen Tuesday, but has since bounced back to around
Y114.900.
The M2 money stock in Japan was up 3.2 percent on year in
January, the Bank of Japan said on Tuesday, worth 923.7 trillion
yen. That topped forecasts for an increase of 0.3 percent following
the 0.1 percent gain in December.
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