The Dollar weakened against both the Euro and Dollar on Wednesday due to an “improving market mood and falling US Treasury bond yields”. The US Dollar Index (DXY) has suffered a sharp decline this morning after recording a fresh 3-year high at 100.52 on Wednesday. The DXY ceased its 9-day winning streak on Wednesday “after investors shrugged off the hangover of the higher US Consumer Price Index (CPI)”. Also hindering the Dollar was US PPI reaching a 12-year high of 11.2% yesterday.
The US Labor Statistics agency reported a figure 0.6% higher than the market consensus of 10.6%. The month prior, the reading came in at 10.3%. A notably higher reading of the US PPI is likely “going to hurt the corporate profits as the higher commodity prices will dampen the margins of the corporate and henceforth the pass on of higher input prices to the households will reduce their real income”. After a tough session, the US Dollar Index continues to edge lower as we head into the European Open.
Sterling made the most of the Dollar’s misfortune yesterday and reclaimed the 1.30 handle. GBPUSD opened the day at 1.2984 and closed at 1.3059. Sterling made further gains overnight and currently resides 1.3130.
The risk-on mood also enabled the British Pound to advance against the Euro. The pair started at 1.1990 and closed at 1.2018.
EURUSD made minor gains yesterday but the Euro was not able to catch much traction. The pair opened at 1.0828 and closed at 1.0864.
On the data front, today’s focus will be on Europe. The European Central Bank is due to give their latest Interest Rate decision today at 12:45, followed by a Press Conference at 13:30. It is well understood by investors that the ECB “faces an increasingly difficult task as it meets this week, with inflation surging and the economic outlook getting more uncertain as the Russia-Ukraine war drags on”. The Minutes from the Central Bank’s last meeting shows that inflation was above 7.5% in March, leading investors to believe the bank will likely hint at possible policy changes.