The US Dollar Index (DXY) remained stable around 98.50 on Thursday, marking its fourth consecutive day in positive territory, as markets digested news of a positive summit between US President Donald Trump and Chinese President Xi Jinping [1][3]. According to a White House official cited by Reuters, both leaders discussed enhancing economic cooperation, including expanding market access for American businesses in China, increasing Chinese investment in the US, and boosting Chinese purchases of US agricultural products [1][3]. Additionally, both leaders emphasized the importance of keeping the Strait of Hormuz open and preventing Iran from acquiring nuclear weapons, which helped ease concerns over potential disruptions to global energy flows [1][3].
Oil markets responded to ongoing geopolitical tensions, with West Texas Intermediate (WTI) crude rising 0.51% to around $97.45, supported by data from the Energy Information Administration (EIA) showing a decline in crude flows through the Strait of Hormuz in the first quarter [1]. The firm oil prices provided support to the Canadian Dollar (CAD), given Canada's status as the largest crude exporter to the US, and helped limit the upside in USD/CAD, which traded around 1.3705 and was virtually unchanged on the day [1]. The Canadian Dollar was the strongest against the Australian Dollar among major currencies [1].
US economic data also influenced market sentiment. The US Producer Price Index (PPI) surged to 6.0% year-over-year in April, up from 4.3% in March and exceeding the 4.9% market expectation. On a monthly basis, PPI rose 1.4%, doubling the previous month's 0.7% and surpassing the anticipated 0.5% increase [3]. This data reinforced expectations for a continued restrictive monetary policy stance from the Federal Reserve, with markets eliminating expectations for 2026 Fed rate cuts and shifting focus toward a potential year-end hike [1][3]. The US Dollar Index remained stable as a result [1][3].
In addition, the US Senate confirmed Kevin Warsh as the new Federal Reserve Chair, with investors weighing his appointment against concerns over central bank independence and ongoing political pressure [3]. Looking ahead, market participants are awaiting the US Retail Sales report for April, which could further influence expectations for Fed policy [3].
CONCLUSION
The US Dollar maintained its strength following positive developments from the Trump-Xi summit and robust US PPI data, which reinforced expectations for a hawkish Federal Reserve stance. Oil prices remained firm amid geopolitical tensions, supporting the Canadian Dollar and limiting USD/CAD upside. Investors are now focused on upcoming US economic data and the implications of the new Fed Chair's appointment.