- US GDP Q1 revisions and increasing Jobless Claims affects USD negatively.
- Weekly Jobless Claims rose higher than expected.
- Markets look forward to PCE figures on Friday.
On Thursday, the US Dollar Index (DXY) experienced a retreat after a sharp recovery on Wednesday. The gains linked to the bond market surge on Wednesday are now being undone following the release of US Gross Domestic Product (GDP) revisions and soft Jobless Claims figures.
Despite some signs of a softening labor market, the likelihood of cuts in June and July remains low. However, there is heightened anticipation for the Personal Consumption Expenditure (PCE) figures due out on Friday, which have the potential to influence the next Federal Reserve (Fed) expectations.
Daily digest market movers: DXY retreats following disappointing data
- Investors are showing signs of nervousness with a disappointing GDP report due to signs of softening Consumer Spending. The headline GDP was revised to 1.3%.
- Markets eagerly anticipate PCE figures from April, which are due on Friday and could sway the Fed's decisions.
- Unemployment data revealed an increase in Initial Jobless Claims from last week's 216K to 219K.
- Despite the increased claims, odds of a cut for June and July remain low while standing around 50% for September.
DXY technical analysis: US Dollar struggles amid negative indicators
The DXY's gains from Wednesday have been mostly trimmed in light of the less-than-favorable data for the US economy. The Relative Strength Index (RSI) is below the 50-level, indicating increased selling pressure and a shift in momentum. The index lost the 20-day Simple Moving Average (SMA), and the Moving Average Convergence Divergence (MACD) is showing red bars, signifying that bearish sentiment has returned.
