USA annualized inflation eases in June, core CPI in line

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Not surprisingly, this coincided with a weaker dollar: the USD tumbled 0.4% on the DXY index to just 95.34, its lowest since late September 2016.

Apparel prices dipped for the fourth successive month and registered a 0.7% annual decline. In particular, core retail sales which exclude automobiles, declined by 0.2% instead of posting an equivalent percentage improvement that was expected by analysts.

Sales at restaurants and bars, as well as at sporting goods and hobby stores fell.

United States consumer prices were unchanged in June compared with an expected gain of 0.1% for the month and the year-on-year rate declined to 1.6% from 1.9% and compared with an expected rate of 1.7%.

The gauge for consumer-price changes was unchanged last month, below expectations of a 0.1% uptick. On a month-on-month basis, the core CPI is expected to rise 0.2 percent after a 0.1 percent gain the previous month. Prices for USA government bonds rose and stocks on Wall Street edged higher.

The University of MI released a report on Friday showing a notable deterioration in US consumer sentiment in the month of July.

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US retail sales unexpectedly decreased for the second consecutive month in June. The negative momentum following Fed Chair Janet Yellen's dovish remarks in her two-day testimony to Congress deepened today.

Inflation probably wouldn't have to accelerate by much to set the stage for the Fed to fit in another rate increase this year, said Michelle Meyer, head of USA economics at Bank of America Merrill Lynch. The Aussie was on track to rise 1.7 percent on the week, lifted by an improvement in broader investor risk appetite thanks to hopes for a more gradual tightening schedule by the Fed and rise in prices of commodities, notably iron ore.

Dallas Fed president Robert Kaplan also sounded a note of caution Thursday. "They need a rebound to confirm what they've been saying about the transitory weakness in inflation". Against the yen, the greenback rose. However, the number was higher than May's 0.3% contraction. The greenback is likely to locate support around the 0.94 region.

The Australian dollar touched a four-month peak of $0.7746. Other data on Friday showed industrial production picked up in June, driven by a surge in oil and gas drilling.

The MSCI All-Country World Index is at an all-time high, and a third-quarter gain for the measure would mark its longest streak of quarterly gains in twenty years. The British pound gained significantly relative to the greenback, moving up by 1.11% to climb above the $1.30 level.

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