The recent downward trend of the US dollar came to a halt, in line with forecasts by financial institution ING. Analysts noted that U.S. economic data has not provided enough momentum to drive a significantly weaker dollar at this point.
This comes after unemployment claims fell to 222,000, compared to a week earlier increase to 232,000. The labor market showed similar patterns in January, with claims peaking at 225,000 before falling back to the 200,000 to 210,000 range.
ING expects a potential stabilization of USD currency pairs as investors await the release of the April Personal Consumption Expenditures (PCE) core price index, scheduled for May 31. The firm suggests that volatility between assets could remain subdued in the coming weeks, potentially fueling the search for carry trades.
Consequently, they express a lack of optimism about a recovery of the Japanese yen, which is currently considered the most attractive financing currency.
On related developments, China’s latest economic data impacted market sentiment. The country reported a 6.7% year-on-year increase in industrial production in April, surpassing the 5.5% expected.
However, retail sales underperformed, registering 2.3% growth versus an expected 3.7%. According to the ING economist, the figures reflect continued caution among households and the private sector in China.
Today’s US economic calendar includes the Leading Index, which is expected to have remained at -0.3% in April. Additionally, Federal Reserve officials Chris Waller, Neel Kashkari and Mary Daly will speak. ING predicts that (DXY) will trade within the 104-105 range in the short term.
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