The Sterling is on four and a half years high

The pound fell for the first time in five days against the dollar after U.K. inflation dropped to its lowest rate in 4 1/2 years in May, damping speculation the Bank of England will raise interest rates sooner than forecast. Sterling weakened against most of its 16 major peers. The yield on two-year U.K. government bonds earlier reached the highest since 2011 after policy maker David Miles hinted that minutes of its June 5 meeting will show the central bank is moving closer to raising interest rates, according to the London-based Times newspaper. Governor Mark Carney said on June 12 that borrowing costs may rise sooner than economists expect.

Sterling slid less than 0.1% to $1.6975 at after rising to $1.7011 yesterday, the highest since August 6, 2009. The pound was little changed at 79.91 pence per euro after yesterday appreciating to 79.59 pence, the strongest level since Oct. 1, 2012. The pound strengthened 8.9 percent in the past year, the best performer after the New Zealand dollar among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro gained 1.7 percent and the dollar was little changed. Regarding the inflations measures, Consumer prices rose 1.5% in May, the least since October 2009, the Office for National Statistics said. That compared with a n forecast of 1.7%. Inflation has been at or below the central bank’s 2 percent target for six months, the longest stretch since 2009.

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U.S. Crude Drops From 9-Month High as Gains Seen Excessive

West Texas Intermediate fell as a technical indicator shows last week’s increase to the highest price in nine months was excessive. Futures slid as much as 0.4 percent in New York. WTI’s relative strength index closed above 70 for a third day yesterday, signaling prices rose too quickly to sustain further gains. Iraq’s army pummeled the positions of Sunni Muslim insurgents who have captured large chunks of territory in the country’s north as the U.S. weighed a military intervention to help the government. WTI for July delivery fell as much as 46 cents to $106.44 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.54 at 4 p.m. Sydney time. The contract lost 1 cent yesterday after ending last week’s trading at $106.91, the highest close for the front month since Sept. 18.

The volume of all futures traded was about 4% above the 100-day average. Prices are up 8.3% this year. In the U.S., crude inventories probably shrank by 750,000 barrels in the week ended June 13, according to the projections before an EIA report tomorrow. Supplies decreased the prior two weeks to 386.9 million barrels, according to the Energy Department’s statistical arm. Gasoline stockpiles slid by 550K barrels last week while distillates, including heating oil and diesel, expanded by 350K barrels, expectations said. The industry-funded American Petroleum Institute in Washington is scheduled to release its own supply data today.

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Gold is jumping over $1,270 per ounce

Gold jumped to $1,270 as The dollar fell for a second day as government reports showed the U.S. economy remains sluggish, backing speculation the Federal Reserve will hold interest rates at historically low levels and Jobless claims climbed by 4,000 in the week ended June 7, a Labor Department report showed today in Washington.

The forecast was a 310,000. U.S. retail sales rose 0.3 percent last month followed a revised 0.5 percent gain in April that was much larger than previously estimated, Commerce Department figures showed today in Washington.

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New Zealand Raises Rates, Kiwi on four months high

New Zealand’s dollar surged, headed for its biggest daily gain in four months, after the central bank raised interest rates and flagged further increases. The two-year swap rate climbed 11 basis points, or 0.11% point, to 4.13%, the highest since July 2010. New Zealand’s central bank boosted its official cash rate by a quarter-percentage point to 3.25 percent, the third increase this year, and signaled more tightening to come. The RBNZ left its forecast for the 90-day bank bill rate broadly unchanged; suggesting borrowing costs may rise twice more this year.

RBNZ Assistant Governor John McDermott said currency traders are mispricing the nation’s dollar and should be taking more notice of falling commodity prices. The kiwi rallied at least 1 percent versus all of 31 major counterparts as Reserve Bank of New Zealand Governor Graeme Wheeler said it was important to contain inflation expectations. And it appreciated 5.8 percent this year. New Zealand’s currency jumped 1.4 percent to 86.70 U.S. cents, headed for its biggest gain on a closing basis since Feb. 4. The kiwi appreciated to as much as 86.85, the highest level since May 15.

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WTI Rose as China is Incraesing its Stockpiles

China is hoarding crude at the fastest pace in at least a decade, shielding itself from supply disruptions and helping keep prices above $100 a barrel.

Chinese President Xi Jinping is building

stockpiles as his nation clashes with Vietnam over resources in the South China Sea and faces potential risks to oil sales from Russia, Africa and the Middle East because of sanctions and violence.

The purchases are helping drive oil prices higher, according to Barclays Plc, Citigroup Inc. and Nomura Holdings Inc. As China’s thirst for crude grows with the expansion of its emergency stockpiles and refining, the International Energy Agency estimates that the Asian nation is poised to surpass the U.S. as the world’s largest oil consumer by 2030.

China bought more than 600,000 barrels a day of surplus crude from January to April. The surplus supplies are calculated by subtracting refinery runs from the combined total of net imports and domestic production.

U.S. crude production rose 77,000 barrels a day to 8.46 million last week, the Energy Information Administration said today. Output reached 8.47 million barrels a day in the week ended May 23, the most since October 1986, according to the EIA, the Energy Department’s statistical arm.

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On two weeks high, the metal is shining...

Gold held near the highest in almost two weeks as speculation some investors are cutting bets on lower prices was weighed against signs of an improving U.S. economy. Palladium traded near a more than three-year high. Bullion rose as much as 1.5 percent since the week ended June 3, halting declines last week at about $1,240 an ounce, partly as the European Central Bank became the first major central bank to take one of its main rates negative. Gold fell to a four-month low on June 3.

U.S. data due tomorrow may show retail sales rose in May, after a report last week showed employment exceeded its pre-recession peak, sending U.S. equities to a record. Palladium, used in pollution control devices in cars, climbed 19 percent this year as mineworkers went on strike since January in South Africa, the second-largest producer. Talks ended without a resolution two days ago. Bullion for immediate delivery added 0.1 percent to $1,261.07 per ounce. It reached $1,263.66 yesterday, the highest since May 28. Gold for August delivery rose 0.1% to $1,261.20 per ounce. Futures trading volume was 50% below the average for the past 100 days for this time of day.

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WTI over $104 per barrel

West Texas Intermediate advanced for a third day amid speculation that crude inventories declined for a second week in the U.S., the world’s biggest oil consumer. Brent was steady in London. Futures rose as much as 0.5% in New York. Crude stockpiles probably fell by 1.5 million barrels in the week ended June 6, according the estimates before data from the Energy Information Administration tomorrow. The Organization of Petroleum Exporting Countries, responsible for about 40% of global supply, will maintain its production quota at 30 million barrels a day when it meets in Vienna, said oil ministers including Venezuela’s Rafael Ramirez. U.S. crude inventories probably dropped to about 388 million barrels, according to the median estimate in the Bloomberg survey of six analysts. Supplies were at 399.4 million through April 25, the most since the EIA began publishing weekly data in 1982. Gasoline stockpiles are forecast to have expanded by 1 million barrels to about 212.8 million, the survey shows. The peak U.S. driving season typically starts from Memorial Day, which was on May 26, to Labor Day on September 1.

The American Petroleum Institute in Washington is scheduled to release separate inventory data today. The industry group collects information on a voluntary basis from operators of refineries, bulk terminals and pipelines, while the government requires that reports be filed with the EIA, the Energy Department’s statistical arm, for its weekly survey. WTI for July delivery gained as much as 48 cents to $104.89 a barrel in electronic trading on the New York Mercantile Exchange and was at $104.69. The contract climbed $1.75 to $104.41 yesterday, the highest close since March 3. The volume of all futures traded was about 91 percent above the 100-day average. Prices have increased 6.4 percent this year.

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