The recent downward trend in the US dollar has stopped, in line with forecasts from financial institution ING. Analysts note that US economic data has not provided enough impetus for the dollar to weaken significantly at this time.
This came after unemployment claims fell to 222,000, down from the previous week’s rise to 232,000. The labor market saw similar trends in January, with claims peaking at 225,000 before falling back to the range 200,000–210,000.
ING expects potential stabilization in US dollar currency pairs as investors await the release of the April core Personal Consumption Expenditures (PCE) price index scheduled for May 31. The firm suggests that cross-asset volatility may remain subdued in the coming weeks, which could encourage the search for carry trades.
Consequently, they express a lack of optimism about the recovery of the Japanese yen, which is currently considered the most attractive funding currency.
In related developments, China’s latest economic data has weighed on market sentiment. The country reported a 6.7% year-on-year increase in industrial production in April, beating the 5.5% expected.
However, retail sales performed worse, recording growth of 2.3% against the forecast of 3.7%. According to an ING economist, the data reflects continued caution among households and the private sector in China.
The US economic calendar to date includes an outperformance index that is expected to remain at -0.3% in April. In addition, Federal Reserve representatives Chris Waller, Neel Kashkari and Mary Daly are scheduled to speak. ING forecasts (DXY) to trade in the 104-105 range in the near future.
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