US dollar gains on yen after consumer price data
Core consumer prices rose by 0.2 per cent in the month, for an annual gain of 2.9 per cent, below economists' projections for a 0.3 per cent and 3.0 per cent gain, respectively.
Headline inflation was as expected for the month, rising by 0.3 per cent, but posted an annual increase of 2.7 per cent for the year, compared with expectations for a 2.6 per cent gain.
The euro was last up 0.03 per cent on the day at US$1.1667, paring an earlier knee-jerk rally on the data. Against the Japanese yen, the greenback strengthened 0.26 per cent to 148.09.
Bitcoin eased back to around US$116,650, below Monday's all-time high of US$123,153.22 following a 14 per cent surge in the space of a week, as investors bet on long-sought legislative policy wins for the cryptocurrency industry this week.
The euro was steady around US$1.16698, after four straight days of losses.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Against the yen, the US dollar was little changed at 147.92, after earlier rising to the highest since Jun 23 at 147.89 yen.
The dollar index, which tracks the greenback against the yen, euro and four others, held at 98.097, just below the overnight peak of 98.136, the highest since Jun 25.
US Federal Reserve chair Jerome Powell has said he expects inflation to increase this summer as a result of tariffs, which is seen keeping the US central bank on hold until later in the year.
Economists polled by Reuters expect headline inflation to increase to 2.7 per cent on an annual basis, up from 2.4 per cent the prior month. Core inflation is expected to rise to 3.0 per cent, from 2.8 per cent.
'Should inflation fail to materialise or remain steady, questions may arise regarding the Fed's recent decision not to cut rates, potentially intensifying calls for monetary easing,' James Kniveton, senior corporate FX dealer at Convera, wrote in a client note.
'Calls from the White House for leadership changes at the Fed may increase.'
US President Donald Trump on Monday renewed his attacks on Powell, saying interest rates should be at 1 per cent or lower, rather than the range of 4.25 to 4.50 per cent range the Fed has kept the key rate at so far this year.
Fed funds futures traders have been pricing in about 50 basis points of interest rate cuts by year-end, with the first quarter-point reduction seen as likely in September.
Currencies barely reacted to data showing China's economy grew 5.2 per cent last quarter, slightly topping analysts' forecasts – in a sign of resilience against US tariffs.
The pound rose 0.15 per cent to US$1.1668 ahead of Bank of England governor Andrew Bailey's annual 'Mansion House' address to London's financial sector on Tuesday, along with finance minister Rachel Reeves. REUTERS
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
43 minutes ago
- Business Times
Europe E3 re-emerges as economic and political powerhouse
GERMAN Chancellor Friedrich Merz makes his first official visit to the United Kingdom on Thursday (Jul 17) to sign a landmark bilateral friendship deal. The agreement confirms not only warmer economic and political ties between London and Berlin, but also the post-Brexit re-emergence of the longstanding, so-called E3 group which includes France too. For much of the period since the UK's 2016 referendum on its European Union membership, relations between these top three European economies have been chilly. The ardently pro-Brussels French President Emmanuel Macron and his various German counterparts, including former chancellor Angela Merkel, still believe Brexit to be an act of political vandalism to the continent. So much so in fact that Poland, the largest economy in Central and Eastern Europe, has increasingly been perceived as a challenger for the third slot in Europe's post-Brexit E3 group. This Paris-Berlin-Warsaw trilateral relationship is sometimes called the Weimar Triangle. However, since the Ukraine war began, this German-French-Polish axis has had less prominence, important as it remains. The reasons behind this include Poland's cultivation of its economic and political relationship with the United States following Russia's invasion of Ukraine. So in the period since the pandemic – which saw the Ukraine conflict and Donald Trump become the US president for the second time – there has been a growing realisation in France and Germany of the need to collaborate more with the UK, and vice versa. This has seen the three G7 and G20 nations re-emerge as a triumvirate of regional powers, including in their quest to build Europe's relationship with Trump. This rejuvenated E3 dynamic has been evident on several high-profile platforms, including when then US president Joe Biden visited Berlin on Oct 18 last year. The European leaders he met for a quadrilateral meeting during his stay were UK Prime Minister Keir Starmer, Macron and then German chancellor Olaf Scholz. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The warmer ties between London and Berlin will be deepened on Thursday in a treaty that will cover defence, economic growth, and wider issues. It will reportedly include a mutual assistance clause specifying that a threat to one nation would be regarded as a threat to the other. This week's UK-German deal is key as it helps cement the E3 trilateral alliance. France is already linked to Germany via the Aachen Treaty and to the UK via the Lancaster House Treaty. The relationship between Starmer and Merz could be especially key for European and wider international relations in the coming years. Both are potentially key reformers whose periods in office may overlap with the next UK election probably in 2028 or 2029, and the next Germany ballot expected in 2029. At the same time as there are warming ties between Berlin and London, the relationship between Paris and London, as well as between Paris and Berlin, is warming up too. Of course, the Franco-German alliance has long been the motor of European integration in the post-World War II era and Macron enjoyed a generally positive relationship with Merkel, which allowed them to achieve much together on the international stage. However, cooperation between the two powers ebbs and flows depending upon the personalities of the office holders in Berlin and Paris. Merz's predecessor as chancellor, Scholz, and Macron, had an uneven relationship, but this may be changing in a positive direction under Merz. Meanwhile, warmer Franco-UK ties were showcased again last week with Macron making his first ever UK state visit, to London and Windsor Castle. The last such state trip by a French president to the UK was by Nicolas Sarkozy almost two decades ago in 2008. Whereas much of the UK-German bilateral relationship has centred on economics, security is key to UK-French ties as both are nuclear states with UN Security Council permanent membership, unlike other European partners. The Lancaster House deal between the two powers opened a window to jointly update nuclear arsenals which is as yet unfulfilled, and there is potential for broader military coordination. Positive as the re-emergence of the UK-French-German E3 relationship is for Europe, the ties will continue to have challenges in the post-Brexit era. This is especially so between the UK and France, and the UK and Germany. Take the example of the ties between Paris and London. Macron had one of the hardest stances on the UK's exit from the EU in the period from 2016. This reflects the complex, contradictory relationship that Paris has long had with London in the context of European affairs. Macron's Brexit positioning, including his robust stance on precluding future UK economic access to the single market, was reinforced by broader French plans to pitch Paris as a competing financial centre to London which began in earnest under the presidency of Francois Hollande. This saw former finance minister Michel Sapin and Hollande's Brexit special envoy Christian Noyer – a former Bank of France governor – openly promoting Paris with key financial firms. This has continued under Macron as he hailed the decision to relocate the European Banking Authority (EBA) to Paris from London as a 'recognition of France's attractiveness and European commitment'. French officials hope that the EBA's relocation will help bring still more UK banking jobs to France's capital city. What France's position on Brexit underlines is how each EU state has distinctive political, economic and social interests that have informed their stance on the UK's exit. Thus, while the EU-27 were, in general, remarkably unified in their negotiations with London, the positions of the individual countries varied according to factors such as trade and wider economic ties and patterns of migration with the UK, domestic election pressures, and levels of eurosceptic support within their populaces. While the position of Paris has now moderated, the two nations remain misaligned in some key areas, including fishing rights. Another example is migration, where Starmer is under growing pressure to stop people illegally crossing the English Channel from France. Last week, Starmer and Macron agreed a new 'one in, one out' returns scheme which would see the UK deporting to France undocumented people arriving in small boats, in return for accepting an equal number of legitimate asylum seekers with UK family connections. However, only time will tell how successful this will be in halting illegal migrants making so-called small boat crossings. Taken together, all of these developments underline that the E3's re-emergence has significant potential to increase collaboration further between Europe's leading three economies. However, the distinctive post-Brexit interests of each state will continue to cause tensions from time to time, which will remain a barrier to the full resetting of the trilateral relations. The writer is an associate at LSE IDEAS at the London School of Economics
Business Times
an hour ago
- Business Times
Trump unveils US$92 billion worth of investments to power AI boom
[PITTSBURGH] US President Donald Trump went to Pennsylvania on Tuesday to announce US$92 billion in energy and infrastructure deals intended to meet big tech's soaring demand for electricity to fuel the AI boom. Trump made the announcement at the inaugural Pennsylvania Energy and Innovation Summit at Carnegie Mellon University, with much of the talk about beating China in the global AI race. 'Today's commitments are ensuring that the future is going to be designed, built and made right here in Pennsylvania and right here in Pittsburgh, and I have to say, right here in the United States of America,' Trump said at the event. The tech world has fully embraced generative AI as the next wave of technology, but fears are growing that its massive electricity needs cannot be met by current infrastructure, particularly in the United States. Generative AI requires enormous computing power, mainly to run the energy-hungry processors from Nvidia, the California-based company that has become the world's most valuable company by market capitalisation. Officials expect that by 2028, tech companies will need as much as five gigawatts of power for AI - enough electricity to power roughly five million homes. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Top executives from Palantir, Anthropic, Exxon and Chevron attended the event. The funding will cover new data centres, power generation, grid infrastructure, AI training, and apprenticeship programs. Race to beat China Among investments, Google committed US$25 billion to build AI-ready data centres in Pennsylvania and surrounding regions. 'We support President Trump's clear and urgent direction that our nation invest in AI... so that America can continue to lead in AI,' said Ruth Porat, Google's president and chief investment officer. The search engine giant also announced a partnership with Brookfield Asset Management to modernise two hydropower facilities in Pennsylvania, representing 670 MW of capacity on the regional grid. Investment group Blackstone pledged more than US$25 billion to fund new data centers and energy infrastructure. US Senator David McCormick, from Pennsylvania, said the investments 'are of enormous consequence to Pennsylvania, but they are also crucial to the future of the nation.' His comments reflect the growing sentiment in Washington that the United States must not lose ground to China in the race to develop AI. 'We are way ahead of China and the plants are starting up, the construction is starting up,' Trump said. The US president launched the 'Stargate' project in January, aimed at investing up to US$500 billion in US AI infrastructure - primarily in response to growing competition with China. Japanese tech investor SoftBank, ChatGPT-maker OpenAI, and Oracle are investing US$100 billion in the initial phase. Trump has also reversed many policies adopted by the previous Biden administration that imposed checks on developing powerful AI algorithms and limits on exports of advanced technology to certain allied countries. He is expected to outline his own blueprint for AI advancement later this month. AFP
Business Times
an hour ago
- Business Times
Oil slips as Trump's 50-day deadline for Russia eases supply fears
[NEW YORK] Oil prices dropped by less than 1 per cent on Tuesday after US President Donald Trump's 50-day deadline for Russia to end the war in Ukraine and avoid sanctions eased concerns about any immediate supply disruption. Brent crude futures settled down 50 cents, or 0.7 per cent, at US$68.71 a barrel. US West Texas Intermediate crude futures were down 46 cents, or 0.7 per cent, at US$66.52. 'The focus has been on Donald Trump. There was some fear he might target Russia with sanctions immediately and now he has given another 50 days,' said UBS commodities analyst Giovanni Staunovo. 'Those fears about an imminent additional tightness in the market have dissipated. That's the main story.' Oil prices had climbed on the potential sanctions but later gave up gains as the 50-day deadline raised hopes that sanctions could be avoided. In the event the proposed sanctions are implemented, 'it would drastically change the outlook for the oil market,' analysts at ING said in a note. 'China, India and Turkey are the largest buyers of Russian crude oil. They would need to weigh the benefits of buying discounted Russian crude oil against the cost of their exports to the US,' ING said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Trump announced new weapons for Ukraine on Monday and had said on Saturday that he would impose a 30 per cent tariff on most imports from the European Union and Mexico from Aug 1, adding to similar warnings for other countries. Tariffs raise the risk of slower economic growth, which could reduce global fuel demand and drag oil prices lower. Also on the tariff front, Brazil will work to get the US to reverse 'as quickly as possible' the 50 per cent tariff it announced on all goods from that country, but does not rule out asking for more time to negotiate, Vice-President Geraldo Alckmin said. China's economy slowed in the second quarter, data showed on Tuesday, with markets bracing for a weaker second half as exports lose momentum, prices continue to fall and consumer confidence remains low. Tony Sycamore, an analyst at IG, said economic growth in China came in above consensus, largely because of strong fiscal support and the frontloading of production and exports to beat US tariffs. 'The Chinese economic data was supportive overnight,' said Phil Flynn, senior analyst with Price Futures Group. Elsewhere, oil demand is set to remain 'very strong' through the third quarter, keeping the market balanced in the near term, the Organization of the Petroleum Exporting Countries' secretary general said, according to a Russian media report. In US supply, US crude stocks rose by 839,000 barrels last week, market sources said, citing American Petroleum Institute figures on Tuesday. US government data on stockpiles is due on Wednesday. REUTERS
