- DXY climbs after better-than-expected jobless claims data.
- PPI figures come in softer, raising concerns about weakening demand.
- Markets await updates on US diplomatic talks in Russia over Ukraine ceasefire.
- Trump threatens 200% tariffs on European wines and champagnes.
The US Dollar (USD) bounced back on Thursday, reclaiming the 104.00 level as traders reacted to softer-than-expected Producer Price Index (PPI) data and positive jobless claims figures. The US Dollar Index (DXY) initially jumped following the data release but later pared gains as investors weighed the implications of slowing inflation and potential demand concerns. Meanwhile, United States (US) diplomats arrived in Russia for ceasefire talks over Ukraine, and President Donald Trump escalated trade tensions by threatening a 200% tariff on European wines and champagnes.
Daily digest market movers: Mixed economic signals, geopolitical tensions rise
- The US weekly jobless claims report showed initial claims at 220,000, lower than the expected 225,000. Continuing claims dropped to 1.87 million, below the forecast of 1.90 million.
- The February Producer Price Index (PPI) came in weaker than expected, with the headline monthly figure at 0.0% vs. 0.3% expected, and the core PPI contracting by 0.1%.
- On a yearly basis, the headline PPI eased to 3.2%, below the projected 3.3%, while the core PPI declined to 3.4% from 3.6%.
- Markets initially viewed the softer inflation data as positive for the US dollar, but gains were quickly reversed as traders interpreted weaker PPI figures as a sign of softening demand.
- US stocks moved lower after PPI data, with sentiment further pressured by Trump’s latest trade threats targeting European imports.
- The CME FedWatch tool indicates that markets widely expect the Fed to maintain rates in the March 19 meeting, while rate cut probabilities for May and June continue to rise.
DXY technical outlook: Oversold bounce meets resistance
The US dollar index (DXY) recovered from recent multi-month lows, climbing back above 104.00 as traders reassessed oversold conditions. Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicate a short-term correction, though selling pressure remains dominant after last week’s sharp decline. Key resistance stands near 104.50, while support rests at 103.50, with further downside possible if sellers regain control.
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