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Dollar Mostly Higher As Strong Employment Data Fuels Rate Hike Hopes

30.11.16 21:28

WASHINGTON (dpa-AFX) - The dollar is turning in a mixed performance Wednesday afternoon, following the release of the Beige Book.

The buck is trading higher against the Euro and the Japanese Yen but has turned lower against the British pound.

The stronger than expected private sector employment report this morning and fueled speculation among investors that the Federal Reserve is likely to raise interest rates at its December meeting. They will be keeping a close eye on the upcoming November jobs report, which is due to be released at the end of the week.

With the Federal Reserve's next monetary policy meeting two weeks away, the central bank released its Beige Book on Wednesday.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, said the economy continued to expand across most regions from early October through mid-November.

Growth in the Boston, Minneapolis, and San Francisco districts was described as moderate, while the Atlanta, Chicago, St. Louis, and Dallas districts cited modest growth.

The Fed said Philadelphia, Cleveland, and Kansas City reported a slight pace of growth, Richmond characterized economic activity as mixed, and New York said activity remained flat.

After reporting weaker than expected job growth in the previous month, payroll processor ADP released a report on Wednesday showing that U.S. private sector employment increased by much more than expected in the month of November.

The report said private sector employment jumped by 216,000 jobs in November following a downwardly revised increase of 119,000 jobs in October. Economists had expected employment to climb by about 160,000 jobs compared to the addition of 147,000 jobs originally reported for the previous month.

While a report released by the Commerce Department on Wednesday showed a bigger than expected increase in U.S. personal income in the month of October, the report also said personal spending rose by less than anticipated.

The Commerce Department said personal income climbed by 0.6 percent in October after rising by an upwardly revised 0.4 percent in September. Economists had expected income to rise by about 0.4 percent compared to the 0.3 percent increase originally reported for the previous month.

Meanwhile, the report said personal spending rose by 0.3 percent in October following an upwardly revised 0.7 percent advance in September. Spending had been expected to climb by 0.5 percent, matching the growth originally reported for the previous month.

Growth in Chicago-area business activity saw a significant acceleration in the month of November, according to a report released by MNI Indicators on Wednesday.

MNI Indicators said its Chicago business barometer jumped to 57.6 in November from 50.6 in October, with a reading above 50 indicating growth in regional business activity. Economists had expected the index to edge up to 52.0.

Pending home sales in the U.S. saw a slight increase in the month of October, the National Association of Realtors revealed in a report on Wednesday. NAR said its pending home sales index inched up by 0.1 percent to 110.0 in October after climbing by 1.4 percent to a revised 109.9 in September.

Aided by the European Central Bank's monetary stimulus measures and other efforts, inflation in the euro area is expected to return to the bank's objective of below but close to 2 percent by 2018-2019, European Central Bank President Mario Draghi said Wednesday.

In an interview with Spanish daily El País, Draghi said that the bank is firmly committed to preserve the very substantial degree of monetary accommodation to secure inflationary target.

The Governing Council would decide upon changing the size of asset purchase program and extension of purchases at the December 8 meeting, Draghi said.

The dollar climbed to a high of $1.0550 against the Euro Wednesday, but has since eased back to around $1.0595.

Eurozone inflation accelerated to a 31-month high in November on food prices, flash data from Eurostat showed Wednesday. Inflation rose to 0.6 percent in November, in line with expectations, from 0.5 percent in October. This was the highest since April 2014, when inflation was 0.7 percent.

A measure of the current economic situation in the euro area rose for the sixth consecutive month in November to the strongest level in nine months, survey data from Bank of Italy and the Centre for Economic Policy Research showed Wednesday.

The euro-coin indicator climbed to 0.45 in November from 0.38 in October. This was the highest score since February, when it marked 0.47.

German retail sales logged the fastest growth in more than five years in October, figures from Destatis revealed Wednesday.

Retail sales grew 2.4 percent from prior month in October, faster than the expected 1 percent increase and reversed a 1.5 percent drop in September. This was the fastest growth since June 2011, when sales climbed 2.6 percent.

German unemployment declined as expected in November, report said citing the Federal Labor Agency on Wednesday. The number of people out of work decreased by 5,000 in November from prior month, in line with expectations.

Germany's unemployment rate decreased slightly in October, the labor force survey published by Destatis showed Wednesday. The jobless rate fell to an adjusted 4.1 percent in October from 4.2 percent in the previous month. In the corresponding month last year, the rate was 4.5 percent.

France's inflation increased in November on higher energy and food prices, flash data from the statistical office Insee showed Wednesday. Inflation rose to 0.5 percent from 0.4 percent in October. The annual rate came in line with expectations.

The outlook for U.K. financial stability remains challenging, the Bank of England said in its half-yearly Financial Stability Report on Wednesday.

The bank said the economy has entered a period of adjustment following the referendum. The likelihood that some U.K. specific risks to financial stability could materialize remains elevated.

Risks associated with the global environment also remain elevated, the bank cautioned. The US election has reinforced existing vulnerabilities. The buck rose to an early high of $1.2413 against the pound sterling Wednesday, but has since dropped to around $1.25.

Consumer confidence in the United Kingdom fell sharply in November, the latest survey from GfK revealed on Wednesday with an index score of -8. That was well shy of expectations for a reading of -4 after coming in at -3 in October.

The greenback has broken out to over an 8-month high of Y114.275, from an early low of Y112.021.

Industrial production in Japan added 0.1 percent on month in October, the Ministry of Economy, Trade and Industry said on Wednesday. That beat forecasts for a flat reading following the 0.6 percent gain in September.

Japan's housing starts increased at a faster pace in October, the Ministry of Land, Infrastructure, Transport and Tourism showed Wednesday. Housing starts climbed 13.7 percent year-on-year in October, following a 10 percent rise in September. Economists had forecast growth to rise to 11 percent.

Japan's small business confidence held steady in November after improving in the previous two months, survey data from Shoko Chukin Bank showed Wednesday. The small business confidence indicator came in at 48.3 in November, the same reading as in October. Meanwhile, it was forecast to fall to 48.0.

Copyright RTT News/dpa-AFX



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