USD Wobbles: Forex Market Reacts to US Economic Data
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The US dollar is facing mixed fortunes on the forex market, reacting to recent economic data releases. Data on initial and continuing jobless claims, alongside PPI figures, have triggered volatility. Let's break down what's happening.
Job Market Impact
The weaker-than-expected jobs data represents a shift in the established trading range. The continuous claims data shows a clear upward trend. Initial claims haven't yet broken out of their 2022 range but are pushing higher, indicating potential softening in the labor market.
Inflation Indicators
The Producer Price Index (PPI), combined with yesterday's Consumer Price Index (CPI) data, which also came in weaker than expected, suggests a potential easing of inflationary pressures. Economists are now adjusting their models in anticipation of the upcoming Personal Consumption Expenditures (PCE) data release later today.
Major Currency Pair Movements
- EURUSD: The Euro has extended its gains against the dollar, reaching highs not seen since 2021. Buyers remain in control, with the next key target around 1.1683 - 1.16916.
- USDJPY: The Dollar has fallen back below key moving averages against the Yen, with support levels to watch around 142.10 - 142.347.
- GBPUSD: The British Pound hit a new yearly high against the Dollar, reaching levels last seen in February 2022. The next target lies around 1.36445, with further potential upside to 1.37683.
- USDCHF: The Dollar has weakened against the Swiss Franc, approaching the low of a swing level from April 2025, around 0.8097 - 0.81288. Further downside could target 0.80389, the low for 2025.
US/China Trade Talks & Small Business Optimism
Ongoing trade discussions between the US and China in London are reportedly progressing positively. Commerce Secretary Lutnick described the talks as "going well" and "fruitful". Meanwhile, the NFIB Small Business Optimism Index rose in May, surpassing expectations, driven by positive expectations for business conditions and sales growth. However, uncertainty remains elevated, with taxes cited as a top concern among small business owners.
US Debt Market
US Treasury yields are showing little change as the US session begins.