Weak data pare traders' view on year-end U.S. rate hike


Paul Ashworth, Chief US Economist at Capital Economics, said, "Earlier this week, Chair Janet Yellen reiterated that the Fed would be watching the incoming inflation data particularly closely over the coming months".

In a separate report, the Commerce Department said retail sales fell 0.2 per cent last month, weighed down by declines in receipts at service stations, clothing stores and supermarkets.

The retrenchment by Yellen has put markets on edge and as a result there will be much focus on the release of Core and Headline Inflation (CPI) and Retail Sales data this afternoon at 13.30 BST.

The Philippine peso somewhat recovered 0.1 percent to 50.610 after earlier fall of 0.3 percent while Indian rupee was steady at 64.4580. The yellow metal was last seen trading at $1,221.70 a troy ounce, where it was up $4.70, or 0.4%, from the previous close.

New Zealand's two-year swap rate rose 1 basis point to 2.26 while the 10-year swaps rose 3 basis points to 3.35 percent.

The Labor Department reported Friday that the consumer-price index, or cost of living, was unchanged last month, while the rate of inflation over the past 12 months slowed to 1.6% from 1.9% in the prior month. The Australian dollar rose 1.22 percent to $0.7823, well on track to post its best weekly performance in four months.

Softer inflation has surprised the Federal Reserve.

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The U.S. data bolstered expectations that the U.S. Federal Reserve would likely to move slowly to continue raising interest rates in the absence of inflation signs.

European shares had their strongest week in more than two months as investors piled back into equities on signs that the world's major central banks would likely not tighten monetary policy as quickly as some had feared. The Fed is now expected to raise interest rates once more this year, most likely in December, and announce plans to start reducing its roughly $4.5 trillion balance sheet following years of US Treasury and Mortgage Backed Securities purchases. Instead, the figures added to doubts about whether Fed policymakers will proceed with an additional rate hike in 2017.

USA 10-year yield fell to 2.303 percent, from 2.348 percent late on Thursday.

Yellen's comments on Wednesday regarding the neutral rate and subdued inflation sent a more dovish message to the markets than we've become accustomed to, particularly of late with a number of central banks suddenly appearing in a rush to tighten monetary policy.

A supply interruption in Nigeria boosted crude oil and prices posted a weekly gain of more than 4 percent on lower USA stockpiles. Brent crude, used to price worldwide oils, was flat at $48.42 per barrel in London.

The New Zealand dollar another high-earning currency that has gained from significant risk appetite this week, shed 0.02 percent to 0.7318 after reaching an eight-month peak of 0.7369 on Thursday.

Brent crude futures, the global benchmark for oil, were up 31 cents at $48.73 per barrel.