Dollar Rebounds as Fed Starts Two Day Meeting

Dollar rebounds broadly as markets as FOMC starts a two day meeting today. Fed will release the statement tomorrow, as well as updated economic projections.

 

Bernanke will also hold a press conference and is expected to talking about recent hot topic of tapering the stimulus program.

 

Data released from US today saw headline CPI rose to 1.4% yoy in May while core CPI was unchanged at 1.7% yoy. Both were inline with expectation.

 

Housing starts rose less than expected to 914k in May while building permits dropped to 974k annualized rate.

 

Released from Eurozone, German ZEW economic sentiment rose slightly more than expected to 38.5 in June.

 

However, the current situation gauge unexpectedly dropped to 8.6. Eurozone ZEW also improved to 30.6, beat expectation of 29.4. ZEW president Fuest noted that German recovery will "proceed timidly" and, "almost half of respondents expect no significant economic impetus in the next half-year."

 

ECB president Draghi said that the central bank has "open mind" at non-standard measures that are "effective in our institutional setup and that fall within our mandate." But he also noted that while "some of those measures may have unintended consequences" it just meant ECB need to be "aware of those consequences and manage them appropriately."

 

In UK, headline CPI rose more than expected by 2.7% yoy in May while core CPI also accelerated to 2.1% yoy.

 

PPI input rose to 2.2% yoy, PPI output rose to 1.2% yoy, output core was unchanged at 0.8% yoy.