US Dollar Extends Losses Amid Higher Producer Prices, Rising Jobless Claims

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The US dollar extended its losses on Thursday as investors initiated modest gains in the leading benchmark indexes. But economic data has been the focus this week, with producer prices and initial jobless claims the latest numbers to be released toward the end of the trading week.

According to the Bureau of Labor Statistics (BLS), the producer price index (PPI) surged 9.7% year-over-year in December, slightly lower than the market estimate of 9.8%. The annualized core PPI advanced 8.3%, higher than the median forecast of 8%.

Cost of services jumped 0.5%, while the prices for goods tumbled 0.4%.

Market analysts believe that this may be the peak of growth in producer prices.

This comes after the consumer price index (CPI) rose at an annualized pace of 7% in December, the highest reading since June 1982.

On the labor front, the number of Americans filing for unemployment benefits increased 230,000 in the week ending January 8, higher than economists’ projection of 200,000. This is also up from the 207,000 jobless claims in the previous week.

Continuing jobless claims fell to 1.559 million in the week ending January 1, while the four-week average rose to just below 211,000 in the week ending January 8.

On Friday, the December retail sales data will be released. The market is anticipating a flat reading, which could be terrible news for the typically busy holiday shopping season.

Moreover, industrial production and manufacturing output numbers will be published, with market analysts penciling in lower expansion from November. The University of Michigan’s Consumer Sentiment Index is expected to ease.

The US Treasury market was mixed toward the end of the trading week, with the benchmark 10-year yield up 0.006% to 1.731%. The one-year bill edged up 0.005% to 0.458%, while the 30-year bond added 0.003% to 2.075%.

The US Dollar Index (DXY), which measures the buck against a basket of currencies, fell 0.23% to 94.70, from an opening of 94.99. The index is poised for a weekly loss of about 1.6%.

The USD/CAD currency pair tumbled 0.39% to 1.2461, from an opening of 1.2509, at 13:25 GMT on Thursday. The EUR/USD rose 0.26% to 1.1473, from an opening of 1.1441.

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