The US Dollar gained strength on Thursday following the release of the latest US Producer Price Index (PPI) data, which showed headline PPI rising 6.5% year-over-year in May, surpassing both the previous print of 5.7% and consensus estimates of 6.4% [1][2]. Nearly 80% of the price surge was attributed to energy products, reflecting the impact of the Iran war on energy prices [2]. Core PPI, which excludes food and energy, rose 0.4% month-over-month in May, below the previous 0.7% and the forecast 0.5% [1]. On an annual basis, Core PPI held steady at 4.9% YoY, below the consensus of 5.4% and unchanged compared to April [1][2].
US Initial Jobless Claims increased by 4,000 to 229,000, above expectations of 219,000, while Continuing Claims rose to 1.795 million [1][2]. Despite the uptick, the labor market remains relatively resilient, limiting downside pressure on the USD [1]. The US Dollar Index (DXY) rose 0.10% to 100.18, supported by a recovery in oil prices, with WTI trading near $90.36 after hitting a low of $88.63, down 1.50% [2].
The Australian Dollar (AUD/USD) fell to a two-month low, trading near 0.6980 and down 0.15% on the day, pressured by cautious market sentiment and renewed US Dollar demand [1]. Technical analysis indicates a bearish near-term bias, with the pair below key moving averages and resistance at 0.6995, while support is aligned at 0.6987 and 0.6979 [1]. The Relative Strength Index (RSI) suggests selling pressure may be nearing oversold territory [1].
The British Pound (GBP/USD) slipped 0.19%, trading at 1.3330 after peaking at 1.3391, as energy-led inflation revived demand for the Greenback [2]. Technical analysis shows GBP/USD holding beneath key moving averages and resistance levels, with sellers retaining control as momentum remains soft [2]. In the UK, traders are awaiting GDP figures, and the swaps market is pricing in 46 basis points of tightening by the Bank of England, led by Governor Andrew Bailey [2]. The US economic schedule will feature the University of Michigan Consumer Sentiment survey, expected to improve from 44.8 to 46 in June’s preliminary reading [2].
Geopolitical tensions in the Middle East, including US President Donald Trump's comments about hitting Iran "hard" and Tehran's attacks on US bases, contributed to market volatility and the recovery in oil prices [2].
CONCLUSION
The US Dollar strengthened against both the Australian Dollar and British Pound following hotter-than-expected PPI data and rising jobless claims, with energy prices and geopolitical tensions further supporting the Greenback. Technical indicators for both AUD/USD and GBP/USD point to continued bearish momentum, while upcoming economic releases and central bank actions remain in focus for traders. Overall, the market reaction reflects heightened volatility and a risk-off sentiment favoring the US Dollar.