Home Daily Commentaries DXY remains strong amid positive unemployment PPI data

DXY remains strong amid positive unemployment PPI data

Daily Currency Update

The US Dollar Index (DXY) maintained its strength this morning to trade near the 105.33 range. Unemployment Claims data in the US was released, showing a drop of 11,000 claims for last week. This shows US layoffs were lower the week of April 6th, but the labor market remained tight. The Producer Price Index (PPI) data was also released, showing a rise of 2.1% for the 12-month period ending in March. This was the largest increase since rising 2.3% in April 2023. This PPI spike indicated persistent hot inflation in the US. This also seemed to contribute to the general market sentiment that the US Federal Reserve will likely keep rates higher for longer.

Key Movers

In Eurozone news, the European Central Bank (ECB) held interest rates flat at 4.5% this morning, noting that “it would be appropriate to reduce the current level of monetary policy restriction” if inflation continues to move toward the 2% target. This and other comments leaned towards a more dovish ECB with rate cuts expected in the future.

China reported their Consumer Price Index (CPI) last night, with a 0.1% year-over-year increase after reporting 0.7% growth in February. This came in below the expected 0.4% increase indicating the Chinese economy remained weak when it came to inflation.

The Canadian dollar was weaker this morning after the monetary policy announcement yesterday where the Bank of Canada (BoC) kept rates at 5%. Market participants are looking towards new CAD data to drive the next policy decision including the upcoming CPI data release on Tuesday. Oil was down about 1% today which could be contributing to the weakening Loonie. The USD/CAD pair climbed to new highs today above the 1.37 mark.

Expected Ranges

  • EUR/USD: 1.07231 - 1.07564 ▼
  • GBP/USD: 1.25108 - 1.25785 ▲
  • AUD/USD: 0.65018 - 0.65529 ▲
  • USD/CAD: 1.36608 - 1.37257 ▲

Written by

Justin Kapadia

OFXpert

After graduating with a Bachelor of Business Administration from Schulich School of Business in Toronto, Justin started and managed his own e-commerce business for two years. Justin’s keen interest in macroeconomics, in particular, how global events can impact currency prices led him to take on a role as a Corporate Client Associate at OFX.