US Dollar Pares Gains after Producer Prices Fall
The US dollar pared prior gains over most major counterparts in early trade on Thursday after producer price growth undershot expectations for May and unemployment claims rose during the recent week.
USDEUR and GBPUSD climbed further off intraday lows of around 1.0783 and 1.2761 respectively, while USDJPY and USDCAD retreated further from session highs of around 157.25 and 1.3751, respectively, following the data.
Producer prices fell 0.2% month-over-month in May which was below the consensus for a 0.1% increase, after April saw a 0.5% increase. Prices rose 2.2% year-over-year in May, down from 2.3% and below the consensus for another 2.5% reading.
Core producer prices also undershot the consensus when stalling at 0% month on month in May, down from 0.5% and below expectations for a 0.3% increase. Year-over-year prices were up 2.3%, down from 2.4% in April and below the consensus for another 2.4% reading.
Meanwhile, Department of Labor data showed weekly unemployment claims rising 242,000 in the week ending June 8, up from 229,000 previously and ahead of the consensus for a 225,000 increase.
The US dollar was quoted higher in relation to all G20 currencies except the Mexican Peso on Thursday but pared gains across the board following the data, even dipping into the red momentarily in relation to some G10 currencies.
The DXY dollar index has retraced about half the losses it suffered on the back of yesterday’s softer-than-expected May CPI print, ING analyst Chris Turner said in a note
Driving that recovery was yesterday’s FOMC meeting and press conference, where it seemed that the main message from Chair Powell was that inflation forecasts were being revised higher and the Federal Reserve easing cycle could be delayed – according to the median Fed expectation.
By closing under 104.95 yesterday, DXY has undone Monday’s bullish break-out and probably means we are in a 104.00-105.50 trading range until further notice. Ecobank: Analysts See 62% Upside on New Target Price
