US Dollar Steady, Markets Respond Positively to Trump-Xi Summit
The US Dollar Index (DXY) moved steadily but remained in positive territory for the fourth consecutive day, trading around 98.50 during Thursday's European session. The relatively limited movement reflects the market's holding position after a series of catalysts that strengthened the dollar in recent days.
Sentiment was supported after Reuters quoted a White House official as saying that the meeting between US President Donald Trump and Chinese President Xi Jinping went "well," including discussions on ways to strengthen economic cooperation. Both sides also touched on expanding market access for US businesses and increasing Chinese investment, and agreed that the Strait of Hormuz must remain open and that Iran must not possess nuclear weapons.
Data-wise, inflationary pressures at the producer level strengthened again. The US Producer Price Index (PPI) rose 6.0% year-on-year in April, higher than 4.3% in March and surpassing expectations of 4.9%, while on a monthly basis it rose 1.4% compared to 0.7% previously and above the 0.5% forecast. This fastest PPI increase since 2022 reinforces expectations that the Fed will maintain its hawkish stance, with the market discounting the possibility of a rate cut in 2026 and beginning to allow for a hike scenario towards the end of the year.
The focus next shifts to the release of US Retail Sales for April, scheduled later in the day, as an indicator of consumption strength and its potential impact on policy direction. On the policy front, the confirmation of Kevin Warsh as Fed Chair is also of concern, as investors weigh its implications for the central bank's independence amid ongoing political pressure.
Source: Newsmaker.id
