The U.S. trade price report revealed surprisingly firm export price gains in June but with restraint in import prices, following big gains for both in the prior two months. We saw big lifts for trade prices from petroleum and food, but with unexpected June declines in the core price measures, and with a resumed skewing of trade price strength that remains skewed toward exports. Trade prices are receiving a lift in 2016 from the drop in the dollar since January, though with a dollar bounce since the Brexit vote that may explain the core price pullback, alongside an ongoing firming in domestic “core” prices and wages. Trade prices remain depressed overall by the global growth slowdown, a petroleum sector recession, and the tail-end of the inventory overhang. Export prices ex-agriculture have risen 0.6% on net in 2016, while import prices ex-petroleum have fallen 0.2%, following big respective 2015 declines of 5.9% and 3.7%. For the remaining June inflation reports, we expect 0.3% headline gains for CPI, PCE chain prices, and PPI, with core price gains of 0.2% for CPI and 0.1% for both PCE chain prices and PPI.
EURUSD continues its sideways, range bound consolidation awaiting a clear direction.
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