Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:
Main Trading Event Of The Day: U.S. Core Retail Sales @ 12.30 GMT
WHAT WE’RE WATCHING TODAY
U.S. Retail Sales Likely To Climb; Dollar Touches One-Week High Vs Yen
Today’s reports are likely to show that retail sales probably climbed 0.4 percent in April, following a 1.2 percent gain in March, although not at March’s rapid pace. The spike in March reflected the return of warmer weather after the cold winter. In April, auto dealers offered heavy discounts and sold slightly fewer cars which may suppress the headline number. Auto purchases account for about 25% of overall retail sales. However, spending in other categories appeared to be steady. Retail sales are a good indicator of how the economy is doing and account for about one-third of what consumers spend, rising sharply when U.S. growth accelerates. While sales have slowed in each of the past two years, economists expect the recent rebound in hiring and economic growth to encourage consumers to spend more. The retail report will be issued @ 12.30 GMT.
The U.S. dollar, meanwhile, rose to the highest level in a week versus the yen before today’s U.S. retail sales data. The dollar traded near the strongest in a month against the euro as improving U.S. economic data bolstered the case for the Federal Reserve to continue tapering stimulus, moving closer to the first interest-rate increase since 2006. The yen declined against most of its major peers as Japanese stocks rose. The dollar rose 0.1 percent to 102.25 yen as of 12:50 p.m. yesterday, after earlier touching 102.24, the most since May 5. It was unchanged at $1.3757 per euro, after reaching $1.3745 on May 9, the strongest since April 8. The yen fell 0.1 percent to 140.66 against the Euro.
U.S. Posts Smaller Budget Surplus In April Than Forecast
U.S. budget data yesterday revealed a smaller budget surplus in April than projected as spending increased at more than twice the pace of tax receipts. Revenue exceeded spending by $106.9 billion last month, compared with a $112.9 billion surplus a year before. The median estimate was for a $114 billion surplus. So far this fiscal year, which began Oct. 1, the U.S is running a budget shortfall that’s about 37 percent smaller than it was a year earlier and was the narrowest at the seven-month mark since 2008. There was a little more growth in spending than would have been anticipated. The economy is starting to recover at a fairly decent pace, excluding the first-quarter slowdown, but given that the outlook is positive for growth this year, continued lower deficits can be expected.
Indian Rupee Having One Of The Best Runs In 2014
India’s economy ended 2013 growing at the slowest rate in a decade and now faces the fastest inflation rate of all the emerging markets at around 8 percent. Fears of the Federal Reserve scaling back its bond purchases sent the Indian rupee plunging to a record low late last year and had strategists predicting more declines this year on worries about sharp outflows from emerging markets. Instead, the currency has strengthened nearly 4 percent in 2014, with more strategists changing course and jumping on the bullish bandwagon. The ongoing election and hopes for new leadership are an important part of the sentiment reversal. Investors are also confident in the leadership at India’s central bank with Raghuram Rajan, former International Monetary Fund chief economist at the helm. With his international and investor credibility, Rajan has been on a mission to fight inflation, raising interest rates 75 basis points to 8 percent. Those higher rates have attracted foreign money in search of yield. Money has continued to flow into India and the rupee, the global environment is EM-friendly and with central bank credibility in good shape, the INR continues to ride a global risk-friendly wave.
That sums up today’s highlights! Remember to keep in touch with us for all your important trading news and information. We’re always on Facebook, Twitter, Google+ and Twitter! We hope you have a profitable day on the markets.
