The US dollar is attempting to take advantage of the temporary bearish sentiment in the broader financial markets this week. Investors are processing the latest initial jobless claims and producer prices data. The former was better than expected, and the latter was hotter than most forecasts. Can the greenback somehow reignite its lost momentum heading into the second half of May?
According to the Bureau of Labor Statistics (BLS), the number of Americans filing for unemployment benefits came in at a fresh pandemic low of 473,000 in the week ending May 8. The market had forecast a reading of 490,000.
Continuing jobless claims edged up to 3.655 million, while the four-week average, which eliminates week-to-week volatility, fell to 534,000.
This comes a week after the US reported an abysmal 266,000 new jobs in April. While this was still an impressive number, it fell way short of the market forecast of about one million.
The US government also released the producer price index (PPI) on Thursday. Producer prices soared 6.2% year-over-year in April, up from 4.2% in March. The market had penciled a gain of 5.9%. On a per-month basis, the PPI rose 0.6%.
The annualized core PPI advanced 4.1% last month, up from 3.1% in March. Economists had anticipated 3.7%. The month-over-month core PPI was unchanged at 0.7%.
With inflationary pressures, a questionable labor market, and gasoline shortages across the Eastern seaboard of the United States, can the dollar take advantage of the chaos and restart its ascent?
US financial markets were mostly flat in pre-market trading. The bond market was mostly in the red toward the end of the trading week, with the benchmark 10-year Treasury down 0.015% to 1.688%. The one-year bill dipped 0.002% to 0.046%, while the 30-year bond dropped 0.017% to 2.399%.
The US Dollar Index (DXY), which gauges the greenback against a basket of currencies, edged up 0.08% to 90.79, from an opening of 90.71. The index is on track for a weekly loss of about 0.2%, although it remains up nearly 1% year-to-date.
The USD/CAD currency pair was flat at 1.2134 at 12:30 GMT on Thursday. The EUR/USD rose 0.07% to 1.2081, from an opening of 1.2074.