The market sentiment remains risk-off amid rising virus cases around the world and fears over new restrictions and lockdowns.
American consumer spending speeds up
In April, American consumer spending demonstrated its greatest soar for five months, which turns out to be a further proof that economic surge was regaining momentum during the second quarter. At the same time inflation kept going up steadily.
Other Thursday’s data demonstrated a bigger-than-anticipated sag in the number of US citizens filing applications for unemployment benefits the previous week. Well, a tightening labor market along with moderately soaring inflation spurred hopes that the US main financial institution will have interest rates lifted next month.
Consumer spending is speeding up and inflation appears to be still firm enough in a tightening labor market. Therefore, the Federal Reserve is going to stay on course with those gradual rate lifts in 2018 notwithstanding the signs of uncertainty elsewhere in the world from populism as well as trade protectionism, as some financial analysts pointed out.
Consumer spending that eats up more than 2/3 of US economic activity managed to leap 0.6% the previous month, as the Commerce Department pointed out. It happened to be the largest ascend since November and it followed a 0.5% jump in March.
Market experts surveyed by Reuters had predicted consumer spending leaping 0.4%. As a matter of fact, spending was spurred by higher prices for gasoline as well as other energy products. Additionally, nondurable goods purchases went up 0.9%. by the way, there were also leaps in buying long-lasting goods. Moreover, outlays on services went up 0.5%, raised by demand for household utilities.
Prices kept gradually soaring the previous month. As for the personal consumption expenditures price index without the fluctuating energy and food went up 0.2% for the third straight month.
It left the year-on-year ascend in the core PCE price index at about 1.8%. By the way, the core PCE index turns out to be the Federal Reserve’s common inflation gauge.
The market sentiment is mixed as investors weigh US stimulus package against the rising infections and worse-than-expected US unemployment claims. Jump in for fresh analysis of EUR/USD, USD/JPY, S&P 500 and gold!
US Initial jobless claims will be announced on Thursday at 15:30 MT time.
The US dollar has broken through the key resistance, it failed to cross since March so far. Riskier assets are dipping. Let’s discuss it in detail.