May 14 2016

May 13, 2016 (Tempus, Inc.) – The U.S. dollar ticked slightly stronger against the majority its peers overnight, continuing the trend of most of this month.  Indeed, the U.S. Dollar Index has strengthened just over 2.0% over the past two weeks.  The greenback has benefited from a modest rise in the expectation of future interest rate expectations.  Yesterday, two Fed presidents stated that the central bank risk stoking an asset bubble by delaying action for two long.

The greenback will look to extend its gains this morning after the economic docket showed that retail sales grew at a faster pace than economist expected.  In fact, sales in April jumped by the most in a year, an indication that consumer spending may be stoked by lower energy prices and rising wages.  Purchases climbed 1.3% last month, the biggest gain since March 2015.  The reading was well above the expected 0.8% advance and improvement from the 0.3% decline in March of this year.
A separate report showed that U.S. wholesale prices rose in April for the first time in three months.  The 0.2% gain in the producer price index followed a decline of 0.1% last month.

While one day of good data is certainly not a trend, rising price pressures and advancement in consumer spending (70.0% of the economy) will add to the argument that the Federal Reserve should raise rates again later this year.  Perhaps, twice.