Dollar falls after US CPI data

The US dollar

The USD index is closing down on the highly psychological level of 100, a level it hasn't touched since 18 April 2022, some 15 months ago the USD weakened further on Wednesday with the release of the US consumer price index (CPI).

Headline CPI growth slowed to top 3% year-over-year (YoY), lower than the 3.1% expected. We have to go back to February 2021 to find a lower consumer price index (CPI). Core CPI rose by 4.8% YoY, also missing estimates of 5%.

The next test for the USD is expected to be the producer price index, which is expected to rise by 0.4% in June compared to a year ago. Core PPI, though, is expected to rise by 2.6% after rising by 2.8% in May. The weak dollar supported US equity markets on Wednesday. It was also good news for Gold, which is now trading at a two-and-a-half-month high.

China overview

Even though China's trade surplus widened in June, this shouldn't hide the fact that this is another sign the world's second-largest economy is dwindling. China's trade missed forecasts for both imports and exports. Imports fell 6.8% in June compared to a year ago.

Economists anticipated a smaller drop of 4.1%. Exports also fell by 12.8%, more than the 10% expected. To find a higher drop, we have to go back to February 2020, when China's exports came virtually to a halt.

China's export slump comes as sluggish overseas economies struggle with inflation and rising interest rates and buy fewer goods from Chinese factories. Chinese factory activity has been shrinking in recent months, and policymakers are now reckoning with the prospect of prolonged slower growth in the world's second-largest economy of around 3% annually, according to economists' forecasts. That is less than half the rates typical throughout recent decades and gives the impression of an economy in recession.

The UK Economy

The UK economy shrank by 0.1% in May compared to April; this is better than the -0.3% economists had anticipated. Industrial production fell by 2.6% in May compared to last year, in line with expectations.

Walt Disney

Over in the US, Walt Disney shares and all sessions on the IG platform were up late on Wednesday. After the bell, The Walt Disney Company said it would extend CEO Bob Iger's deal by two years, taking his tenure through 2026. Iger told CNBC in February that he had no intention to stay longer than two years in his post, which would have taken him through 2024.

Iger had a successful 15 years at the company as CEO, starting in 2005, during which the company expanded in many directions, including the acquisition of Pixar for $7.4 billion, Marvel for $4 billion, and possibly the most lucrative deal in the purchase of Lucasfilm from George Lucas to acquire the Star Wars multimedia franchise and Indiana Jones series.

Iger returned to Disney in November, retaking the job from Bob Chapek, who was appointed CEO in early 2020. Iger planned to prepare his next successor during his new stint as CEO.

Delta Air Lines

Investors and traders are now looking west as the US earnings season is about to start. Before US banks open tomorrow, a few stocks are due to report today. Delta Air Lines is one of them.

Over the past three months, the stock has risen some 53%, benefiting from high demand for travel following the pandemic. But there is still a long way to go to get Delta Air Lines's share of pre-pandemic levels Since February 2020, Delta's stock has been down about 15.5%. Will this upcoming report give the stock another boost?

PepsiCo

The street expects earnings of $2.35 per share, up 64% YOY. Revenue is forecast to rise by 11.9% YoY to $15.46 billion. For the full fiscal year, analysts are currently forecasting earnings per share (EPS) of $6.13 on revenue of $56.86 billion PepsiCo is also due to report Q2 earnings before the opening bell.

The street expects the group to post adjusted earnings of $1.96 per share, which would be a 5.4% increase on the same quarter a year ago. Revenue is expected to rise by 7.4% YoY to $21.72 billion. Investors also await any potential update on the full-year forecast. PepsiCo currently expects to post revenue of $90.97 billion, up 5.3%, and EPS of $7.96 billion, up 7.8%.

US crude oil

US Crude stocks rose much more than expected last week, according to the enviromental impact assessment (EIA) crude inventories rose by 5.9 million barrels last week as net crude imports rose by 600,000 barrels per day. U.S. gasoline stocks were virtually unchanged, falling by just 3,000 barrels, while distillate stockpiles rose by 4.8 million barrels.