The US dollar is struggling to stay in positive territory on Tuesday as investors comb through the latest inflation numbers and the broader economic trends. With recession fears intensifying, will the greenback take advantage of the situation and continue to its upward ascent?
Although there is some expectations that price inflation might have peaked in March, the current consumer price index (CPI) data have many investors concerned about the economic ramifications of these price pressures.
As FX Daily Report noted on Tuesday, price inflation topped market estimates and remained at a 40-year high:
According to the US Bureau of Labor Statistics (BLS), the annual inflation rate hit 8.5% last month, topping economists’ expectations of 8.4%. This is also up from 7.9% in February.
The core inflation rate, which eliminates the volatile food and energy sectors, also jumped to 6.5%.
In other economic data, the National Federation of Independent Business’ (NFIB) Optimism Index fell to 93.2, with inflation becoming entrepreneurs’ chief concern, topping labor quality. The IBD/TIPP Economic Optimism Index increased to 45.5 in April, up from 41 in March.
On Wednesday, the producer price index (PPI) numbers will be released. The annualized PPI is forecast to have risen 10.6% in March, with some estimates going as far as 11%. The core PPI is also forecast to remain at 8.4%.
The US Treasury market was red across the board, with the benchmark 10-year yield down 0.089% to 2.693%. The one-year bill dropped 0.07% to 1.714%, while the 30-year bond added 0.022% to 2.799%.
The US Dollar Index (DXY) surged 0.23% to 100.17, from an opening of 99.93, at 16:49 GMT on Tuesday. The index, which gauges the greenback against a basket of currencies, has soared 4.4% so far this year. Over the last 12 months, the DXY has spiked more than 9% as investors continue to flee to the conventional safe-haven asset.
The USD/CAD currency pair fell 0.14% to 1.2616, from an opening of 1.2634. The EUR/USD declined 0.44% to 1.0838, from an opening of 1.0886.