US Dollar Shrugs Off Strong Inflation Report
The US dollar stays almost unchanged after inflation data. The US Labor Department reported, that US headline CPI accelerated to 2.8% yoy in May, up from 2.5% yoy and exceeded forecast of 2.6% yoy. The headline number is the fastest in six years since 2012. Core CPI also accelerated to 2.2% yoy, up from 2.1% yoy and met expectations.
The British pound shrugs off slightly weaker than expected wage growth data and awaits tomorrow’s CPI release. The UK Office for National Statistics (ONS) said, that unemployment rate was unchanged at 4.2% 3 months to April, met expectation. Average weekly earnings, including bonus, slowed to 2.5% 3moy in April, below expectation of 2.6% 3moy. Average weekly earnings including bonus slowed to 2.8% 3moy, below expectation of 2.9% 3moy. UK claimant count fell by 7.7k in May, better than expectation of 11.3k rise.
The euro also showed little reaction to ZEW report. German ZEW economic sentiment fell to -16.1 in June, down from -8.2, below expectation of -14.6. Current situation index decreased to 80.6, down from 87.4, below expectation of 85.0. Eurozone ZEW economic sentiment fell to -12.6, down from 2.4, below expectation of 0.1. Current situation index declined -16.2 to 39.9.
The Organisation for Economic Co-operation and Development (OECD) projects German economic growth to slow from 2.5% in 2017 to 2.1% in 2018 and maintain the same pace in 2019. Exports growth is expected to slow from 5.3% in 2017 to 4.5% in 2018 and 4.5% in 2019. CPI is projected to be unchanged at 1.7% in 2018 and climb further to 2.0% in 2019. Core CPI is also expected to be unchanged at 1.3% in 2018 and rose to 2.0% in 2019. Unemployment rate is projected to drop from 3.7% in 2017 to 3.4% in 2018 and then 3.3% in 2019.
The highly anticipated Kim-Trump summit in Singapore just resulted in a symbolic agreement without details. It is reported, that North Korean leader agreed to wind down his nuclear ambitions so long as the US promised not to attack his country. Donald Trump said that US should stop war games with South Korea, referring to the military exercise.