Sterling moves in a positive zone after UK inflation data
Sterling rose in European trade on Wednesday against a basket of major rivals, extending gains for the third session against the dollar and moving off four-week lows after UK inflation data.
Mainline UK inflation rose just 2%, the slowest such pace in three years, however, markets focused on services inflation, which remains far from the Bank of England’s targets, in turn hurting the odds of a rate cut in August.
The Price
The GBP/USD pair rose 0.2% to $1.2733, with a session-low at $1.2700.
The pair rose 0.1% on Tuesday, the second profit in a row away from four-week lows at $1.2657.
UK Inflation
Earlier UK data showed mainline consumer prices rose 2% y/y in May, the slowest such pace since July 2021, and down from 2.3% in April.
Core prices rose 3.5%, matching estimates and down from 3.9% in the previous reading.
However, services prices rallied 5.7% in May, above estimates of 5.5%.
Even as mainline inflation fell to 2%, economists expect it to rise once more soon as services prices remain too high, thus it’s not likely The BOE will cut interest rates soon.
UK Rates
There’s now a 36% chance the BOE will cut interest rates in August, down from 55% in previous estimates.
Traders now only expect 39 basis points of total interest rate cut by the BOE this year.
Ripple tanks over 8% amid crypto selloff
Most cryptocurrencies fell on Tuesday amid a heavy selloff that hit most high-risk assets following data.
Earlier US government data showed retail sales rose 0.1% m/m in May, below estimates of 0.2%.
On a yearly basis, sales rose 2.3% to $703.1 billion in May.
Recently, the Federal Reserve announced no changes in interest rates at the June 11-12 meeting, maintaining them at 23 year highs.
It pointed to persistent inflation risks as a basis for estimating only a single interest rate cut this year.
Ripple
Ripple tumbled 7.8% as of 21:03 GMT on Coinmarketcap to $0.4813.
Aussie climbs after expected rate decision
The Australian dollar rose against most major rivals on Tuesday after an expected decision by the Central Bank.
The Reserve Bank of Australia decided to maintain interest rates unchanged today at 4.35%.
On trading, the AUD/USD pair rose 0.6% as of 20:04 GMT to 0.6652.
Loonie
The Canadian dollar stabilized against its US counterpart at 0.7289 as of 20:04 GMT.
US Dollar
The dollar index stabilized at 105.3 today, with a session-high at 105.5, and a low at 105.1.
Earlier government data showed retail sales rose 0.1% m/m in May, below estimates of 0.2%.
On a yearly basis, sales rose 2.3% to $703.1 billion in May.
After the data, US 10-year treasury yields fell by 2.9 basis points to 4.25% on hopes the Fed will soon end the cycle of policy tightening as consumer spending weakens.
US crude climbs above $80 a barrel, while Brent rushes to seven-week high
Global oil prices rose in American trade on Tuesday for the third straight session, with US crude trading above $80 a barrel for the first time in three weeks, while Brent rose to seven-week highs on expectations of reduced global inventories in the third quarter of the year due to increasing summer demand.
Now traders await initial US crude stocks data later today from the American Petroleum Institute, expected to show a drawdown for another week.
Prices
US crude rose 0.7% to $80.37 a barrel, the highest since May 29, with a session-low at $79.19.
Brent rose 0.5% to $84.88 a barrel, the highest since May 1, with a session-low at $83.69.
On Monday, US crude rose 1.9%, while Brent rallied 2.2%.
Global Stocks
RBC Capital Markets’ analysts expect global crude stocks to fall by 850 thousand bpd in the third quarter as summer demand picks up.
US Stocks
Later today, the American Petroleum Institute will release data on US crude stocks, expected to show a drawdown for the second week in a row.