The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against a basket of six major currencies, is back below 104.00 after briefly rising on lower PPI figures. Markets await comments from US diplomats visiting Russia to discuss a ceasefire deal, which has been greenlit by Ukraine. Meanwhile, US President Donald Trump has threatened Europe with 200% tariffs on all wine and champagne coming from the region.
On the economic front, a slew of data is due out this Thursday at 12:30 GMT. In addition to the weekly US Initial Jobless Claims, the US Producer Price Index (PPI) data for February is also due. Markets are anticipating a lower producer inflation figure after a weaker-than-expected US Consumer Price Index (CPI) was released on Wednesday, which also led to the PPI reading.
Daily Market Movers Summary: Impact of PPI Reversal Markets saw US yields jump to a five-day high of 4.33% after hitting 4.15% earlier this week. The move was driven by an outflow of positions from US Treasuries and into US equities. Yields are inversely correlated to US Treasury prices, so if US Treasury prices fall, US yields jump, supporting a stronger US Dollar. The US weekly Jobless Claims and Producer Price Index (PPI) for February have been released: Initial Jobless Claims for the week ending March 7 came in at 220,000, below the 225,000 expected. Continuing Jobless Claims fell to 1.870 million, below the 1.900 million estimate.
The monthly Producer Price Index for February fell to 0.0%, well below the 0.3% estimate and 0.4% from last month. The monthly core PPI even contracted by 0.1%, well below the 0.3% estimate.
The annual headline PPI fell to 3.2%, just below the 3.3% consensus, and further down from the 3.5% seen last month. The annual core PPI reading, excluding food and energy, came in at 3.4%, just below expectations of 3.5% and from 3.6%.
The initial reaction was supportive of the US Dollar, although within an hour of the release of the figures, the move reversed. Traders saw evidence in the weaker PPI that demand is actually flailing and could deteriorate further. Equities plunged after the PPI headlines that came just after US President Trump mentioned 200% tariffs on European wine and champagne.
The CME Fedwatch Tool projects a 97.0% chance of no rate change at the Fed's upcoming meeting on March 19. The chance of a rate cut at the May 7 meeting is at 28.1% and 76.9% at the June meeting.
The US 10-year Treasury yield is trading around 4.34%, down from a near five-month low of 4.10% hit on March 4 and a five-day high. (Newsmaker23)
Source: FXstreet
