American focus: inflation fears continue to support USD [E]

Dollar renews the growth versus basic currencies after publication of inflationary data, which activate speculations concerning the continuation of Federal Reserve interest rate increase in the USA.

Labor Department informed PPI index, which exclude food and energy PPI grew on 0.3% after strengthening at 0.1% in the previous month.

The forecasts assumed less significant index's growth, at 0.2%.

Major index PPI strengthened at 0.2% against expected 0.5% and growth at 0.9% in April.

«The report today validated the Fed's concerns about inflation,» said Richard Franulovich, leading currency strategist of New-York representation Westpac Banking Corp.

«The Fed has to raise interest rates to contain that, it will support the dollar», - thinks analysts.

Futures market in the recent time on 90% considers probability of Interest rate increase on a quarter of percentage point to 5.25% in this month.

On Monday similar possibility was 84%, and 72% two weeks ago.

Other government report has fixed the slowdown of retail sales in May to 0.1% in comparison with 0.5% in April. Nevertheless, the index which exclude auto sales appeared practically on the level of expectations 0.5% after growth at 0.8% month earlier.

This fact showed that despite some cooling, consumer activity in the USA remains on the high level.

Nevertheless, it is possible to note that in spite of strengthening the dollar could not go outside the limits which developed in the last days of range and probably it will remain in these limits before day end. The exception was only the yen, which rate sharply decrease after falling on Japanese stock market.

Considering general concern in inflation problem this instability likely will maintain before the CPI publication on Wednesday, before FOMC meeting inflationary report, which allow to predict more confidently how will develop events on currency market in the recent time.

Stock market of the USA opened without certain tendency after publication of ambiguous economic data and in the recent time major indexes trade near zero levels.

Positive corporate news and falling of oil prices support the market now. In particular, Best Buy and Goldman Sachs presented stronger quarter results in comparison with expectations and Qualcomm rose its forecast for Q3.