Daily Afternoon Report 15.06.2016

The dollar remained lower against the other major currencies today, despite the release of upbeat U.S. data as investors remained cautious with the greenback ahead of the Federal Reserve’s upcoming policy statement.

The U.S. Commerce Department said that producer prices increased by 0.4% last month, against forecasts for the 0.1% increase to remain at the levels seen in April.

The producer price index was down 0.1% from a year earlier, in line with expectations.

Core producer prices, which exclude food and energy, also increased by 0.3% last month, above forecasts for a 0.1% increase.

Separately, the New York Federal Reserve said its Empire State manufacturing index rose to 6.01 in June from a reading of -9.02 the previous month. Analysts had expected the index to improve to -4.00 this month.

The Fed was to end up  its two-day policy meeting later today  and investors were looking for fresh indications on whether the U.S. central bank still expects to raise interest rates twice this year.

Markets pushed back expectations for a summer rate hike by the U.S. central bank after a dismal U.S. employment report for May, which showed the slowest rate of jobs growth since September 2010.

The pound strengthened after the U.K. Office for National Statistics said the unemployment rate fell from 5.1% to 5.0% in the three months to April, the lowest level in more than a decade.

Average earnings excluding bonuses rose by 2.3% in the three months to April from a year earlier, compared to expectations for a 2.1% rise and up from 2.2% in the three months to March

Earnings including bonuses increased by 2.0% on a year-over-year basis, unchanged from the previous three months. Economists had expected growth of 1.7%.

But sentiment on sterling remained fragile as a number of opinion polls showed that the U.K.’s EU referendum race is tightening ahead of the June 23 vote.

Elsewhere, USD/CAD was little changed after Statistics Canada said manufacturing sales increased by 1.0% in April, beating expectations for an uptick of 0.6%, after a 0.9% fall the previous month.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.18% at 94.86, off a one-and-a-half week high of 95.15 hit overnight.