US Dollar Rises As Import Prices Plunges in June By Most Since 2008
THE TAKEAWAY: [U.S. import prices plunges in June by most since December 2008] > [Slowing overseas economies eases price pressures] > [USDCAD strengthens]
Prices of goods imported into the U.S. plunged in June by the most since December 2008, reflecting lower costs for fuel and food. The Bureau of Labor Statistics (BLS) released a report today that showed that its import-price index fell 2.7 percent in June from the previous month and 2.6 percent from a year ago. Import prices excluding fuel fell 0.3 percent in June from a month ago. This follows a decline of 1.2 percent in May on a monthly basis, revised from a 1.0 percent drop originally estimated. The consensus estimate of economists surveyed by Bloomberg News had called for a decline of 1.8 percent month-on-month and a 1.5 percent drop year-on-year in import prices.
Price pressures in the U.S. have eased as the slowdown in overseas economies has restrained demand for raw materials such as copper and oil. The falling cost of goods and materials indicate that prices are under control, and is consistent with the Federal Reserve’s projections of easing inflation.
USDCAD 1-minute Chart: July 12, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
In the minutes after the import prices report was released, the U.S. dollar strengthened against the Canadian dollar, gaining as much as 22 pips. At the time of this report, despite a slight retracement, the USDCAD pair was trading higher than pre-data levels at C$1.0235.
--- Written by Tzu-Wen Chen, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.