The US dollar index (DXY00) fell by 0.71% on Thursday, reaching a 3-1/4 year low amid trade uncertainty prompted by President Trump’s comments about imposing unilateral tariffs on US trading partners. This decline was fueled by weaker-than-expected US jobless claims and Producer Price Index (PPI) reports, raising expectations for Federal Reserve rate cuts later in the year. Initial unemployment claims held steady at 248,000, while continuing claims rose by 54,000 to 1.956 million, both indicating a weaker labor market.
The May PPI rose to 2.6% year-over-year, aligning with expectations, but core PPI increased less than anticipated. Concurrently, the euro surged 0.78% against the dollar following ECB comments indicating a potential pause in interest rate cuts. In Japan, the yen strengthened against the dollar, rising to a one-week high due to safe-haven demand triggered by economic uncertainties. Precious metals saw gains, with gold increasing 1.76%, driven by the dollar’s slide and geopolitical tensions in the Middle East.
In the UK, manufacturing production fell by 0.9% month-over-month in April, missing expectations for a 0.7% decline, while industrial production decreased by 0.6%, also worse than expected. These weak reports raise concerns about industrial metal demand, particularly in light of President Trump’s tariff threats.
