 "Global stocks up, dollar down as US bond yields dip on weak inflation data")
The US dollar weakened and government bond yields fell to multi-week lows on Friday after a benign reading of US inflation in June and soft retail demand raised doubts on the Federal Reserve increasing interest rates later this year. On the other hand, oil prices were headed for a weekly gain of more than 4 per cent on lower US stockpiles.
Global stock markets scaled fresh record highs, capping their best week in more than two months, and oil prices gained in volatile trading amid signs of strengthening demand.
The US consumer price index increased 1.6 per cent, the smallest gain since October 2016, after rising 1.9 per cent in May, the Labour Department said. Year-on-year (y-o-y) consumer price index (CPI) has been softening steadily since February when it hit 2.7 per cent.
The CPI's drop of 0.1 per cent in May and the lack of a rebound last month could trouble Fed officials who have largely viewed a recent moderation in price pressures as temporary.
"The CPI data begs the question, at what point does transitory becomes something that is more sustained, in terms of the softness," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.
The dollar index, which tracks the greenback against six major rivals, was down 0.5 per cent to 95.248 after earlier falling to 95.186, its lowest since September 2016. The drop came after the lacklustre US data raised doubts about US economic growth and whether the Fed will hike rates again this year.
"This cements the weaker trend in the dollar and lower US yields and I think this story has got legs," he said.
More From This Section
The annualised rate of inflation in several CPI components over the past three months showed declines of 4.9 per cent in apparel, 5.5 per cent in used cars and trucks and 4.1 per cent in professional services, said Heidi Learner, chief economist in New York for brokerage Savills Studley, a unit of Savills Plc.
The data indicates "a little bit of concern about how the Fed is going to normalise policy," Learner said.
Yields drop
US Treasury yields dropped to multi-week lows as the benign inflation data and unexpected fall in retail sales fueled doubts about an interest rate increase later this year.
The benchmark 10-year US Treasury note rose 8/32 in price to yield 2.3212 per cent. The 10-year German Bund ticked up almost 1 basis point to yield 0.525 per cent.
The dollar index fell 0.4 per cent against a basket of currencies, while the euro gained 0.39 percent to $1.144.
The Japanese yen strengthened 0.52 per cent versus the greenback at 112.69 per dollar, while the Mexican peso gained 0.48 per cent and the Canadian dollar rose 0.31 per cent versus the greenback.
Stock markets, meanwhile, marched higher. MSCI's gauge of equity performance in 47 countries gained 0.38 per cent, and its pan-European FTSEurofirst 300 index rebounded to rise 0.07 per cent.
The Dow Jones Industrial Average rose 19.57 points, or 0.09 per cent, to 21,572.66. The S&P 500 gained 4.28 points, or 0.17 per cent, to 2,452.11 and the Nasdaq Composite added 12.76 points, or 0.2 per cent, to 6,287.19.
Ten of the 11 major S&P sectors rose, with the utilities index's 0.73 per cent gain leading the advancers.
Shares of JPMorgan Citigroup and Wells Fargo, which have run up in the past few weeks, were lower as their earnings reports failed to excite investors.
Oil up: