U.S. events wrapped up: better, but... - Westpac

Analysts at Westpac explained the events overnight in the U.S. session, that were mostly better, but ... the dollar was mixed.

Key Quotes:

"US data mostly printed on the strong side (see below), but USD reaction was mixed. EUR/USD fluctuated between 1.1303 and 1.1349 for little net change. USD/JPY initially rose from 108.90 to 109.65, but completely retraced.

FOMC centrists Williams and Lockhart said the next few meetings, including June, are live and suggested scope for 2 or 3 hikes this year, which is rather aggressive. US CPI, industrial production, capacity utilisation and house building all beat estimates. The US 10yr treasury yield finished on its highs of 1.77% and the 2yr rose from 0.78% to 0.83% - a three-week high – as the market reassessed the chances of Fed rate hikes.

On the data front, US CPI rose 0.4% in April (vs 0.3% expected) - the largest monthly gain since Feb 2013, boosted by higher gasoline prices. The ‘core' inflation rate was 0.2% m/m, 2.1% y/y. Industrial production rose 0.7% in April (vs 0.3% expected), though it was driven by a surge in utilities output, with manufacturing up 0.3% as expected. Housing starts rose 6.6% (vs 3.3% expected), but this still leaves us with a restrained trajectory going into the important spring construction period. Building permits rose 3.6% (vs 5.5% expected)."