Dollar Rises As Annual PPI Rises to New Highs Better Than Forecast, Pound Declines

After robust, performance PPI inflation statistics, the dollar surges in the early US session. Retail sales and manufacturing numbers that were lower than predicted were dismissed. For the time being, the Yen and Euro are the next strongest currencies. The pound continues to be pushed down by the delay in its reopening, as well as its trading and worst-case scenarios, as well as commodity currencies. Despite the fact that oil prices have remained stable, the Canadian dollar has been the lowest thus far.

The US producer price index (PPI) for final demand rose to 6.6% year-on-year in May from 6.2% in April, data released by the US Bureau of Labor Statistics showed on Tuesday. This value turned out to be above market expectations of 6.3%. On a monthly basis, the PPI was 0.8%. Further details of the publication showed that the core PPI rose to 4.8% from 4.1%, in line with analyst estimates.

Retail sales in the United States fell -1.3% mom to $620.2 bln. In May, worse than expected -0.4% mom. Sales excluding cars fell 0.7% mom, which is worse than expected 0.5% mom growth. Sales excluding gasoline fell -1.5% mom. Sales excluding cars and gasoline fell 0.8% mom. Total sales for the period from March to May rose 36.2% over the same period last year. Following this news, the greenback maintains its resilience. At the time of writing, the US Dollar Index was trading at 90.65, up 0.15 percent for the day.

Dollar Holds Ground Amid UK’s Rising Job Data As Pound Declines

Despite a rather bullish UK jobs report, the GBP is underperforming, with cable breaking through critical support at 1.4075. Economists believe that in the next months, the UK jobs data will become a more important driver for sterling. With the UK’s furlough program set to end next month, a wave of job losses could be on the way.

The UK unemployment rate fell to 4.7% in the three months to April from 4.8%, in line with expectations. This is still 0.8% higher than the pre-pandemic level. However, this is -0.3% lower than in the previous quarter. The average profit excluding bonuses increased by 5.6% in 3 months, which is higher than expected by 5.3% in 3 months. The average profit, including bonuses, rose 5.6% YoY, which is above expectations of 4.9% in 3 months. The number of applicants fell by 92.6 thousand in May.

The markets will be watching the FOMC policy meeting on Wednesday with bated breath. The Fed has adhered to its script and will keep its ultra-loose monetary policy in place, but investors will need to hear this message again, as US CPI has risen above consensus for two months in a row.