The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, rallies above 104.00 on Thursday after the weekly jobcless claims data. Borrowing costs were kept unchanged overnight by the Federal Reserve (Fed), and projected two interest rate cuts for 2025. During Wednesday's Fed meeting, Chairman Jerome Powell said that any tariff-driven bump in inflation will be "transitory." However, he added later that it will be very challenging to say with confidence how much inflation stems from tariffs versus other factors. He also said recession odds have moved up, though are not high, Bloomberg reports.
Meanwhile US yields are plunging lower with investors heading into US bonds. The prospects of yields set to decline once the Fed starts cutting, sees a flight into the safe haven asset. That together with the geopolitical uncertainty as clearly a quick ceasefire for Ukraine is out of the cards and geopolitical tensions are heightened in Turkey and Gaza, makes sense that the safe haven US bonds are favoured again.
Daily digest market movers: Bonds push US yields lower
At 12:30 GMT, the most important data for this Thursday was released:
US Initial Jobless Claims ticekd up to 223,000, coming from 221,000. The US Continuing Jobless Claims came in at 1,892 million against 1,859million last week.
The Philadelphia Fed Manufacturing Survey for March fell to 12.5, better than the expected 8.5 and from the previous 18.1.
At 14:00 GMT, US Existing Home Sales month-on-month for February will be released. Expectations are for a contraction to 3.95 million compared to 4.08 million the previous month.
Equities are struggling with European indices facing big profit-taking. The German Dax is down over 1%. US equities are trying to brush off the negative tone and turn higher on the day.
According to the CME Fedwatch Tool, the probability of interest rates remaining at the current range of 4.25%-4.50% in May's meeting is at 80.5%. For June, the odds for borrowing costs being lower stand at 71.1%.
The US 10-year yield trades around 4.22%, heading back to its five-month low of 4.10% printed on March 4.
Source: fxstreet
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