US Open Note – Dollar rally stalls despite strong jobless claims and PPI



Jobless claims fall again but dollar slips

The producer price index and initial jobless claims out of the United States are in the spotlight today after last week’s disappointing jobs report and the surprise jump in inflation yesterday.

US initial jobless claims declined to 473 thousand in the week ended May 7 versus 490K forecast after Wednesday’s inflation shock and the Federal Reserve was clear that the employment outlook will have to notably rise before there is a change in monetary policy. Annual inflation climbed to the highest figure since 2009, beating expectations. The producer price index increased to 6.2% y/y from 4.2% before, surpassing expectations.

The US dollar index is steadying after coming close to the 91.00 round number following Wednesday’s buying interest, while dollar/yen has lost momentum and is hovering near the 109.70 resistance. Euro/dollar is also flattening near the $1.2670 level, meeting the 20-day simple moving average (SMA). The British pound is falling back below $1.4040 despite the BoE Chief Economist Haldane sounding positive on the UK outlook.

US stock futures are set for a positive open on Thursday, ending yesterday’s selling interest.

Walt Disney is announcing its earnings after the US market open, and Disneyland has now reopened, and tourists have started visiting again.

European stocks are falling significantly amid fears that rising inflation might boost central banks to tighten monetary policy earlier.

Oil retreats; commodity currencies ease

The aussie is continuing the sell-off move against the greenback after a strong decline yesterday, but the kiwi has turned positive ahead of the US open. Dollar/loonie is rebounding on the six-year low of 1.2045.

Elsewhere, oil prices have dived to $64.30/per barrel, flirting with the long-term ascending trend line. However, these losses may not last long, as the International Energy Agency stated, that the demand for crude is outpacing supply. The yellow metal is flattening near $1,817/per ounce, pressured by higher Treasury yields.

Vaccination rollout news

The vaccination across the UK is accelerating in areas that coronavirus cases are still high, however, the restrictions will be eased further next week. Also, the UK is thinking of buying additional AstraZeneca doses, while Norway has removed the AstraZeneca vaccine from its program. In the US, Phizer/BioNTech shots have been approved to be used for adolescents.

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.