- The EUR/USD dropped to 1.1650, a decrease of 0.45% for the day, breaking a two-day upward trend.
- The US Dollar Index (DXY) has bounced back past the key level of 98.00 after reaching a two-week low.
- US PPI data reflects a significant rise in July, with both headline and core figures exceeding forecasts.
On Thursday, the Euro (EUR) lost ground against the US dollar (USD) as a surprising jump in the US producer price index (PPI) ended a two-day rally that had been supported by a rebound in the dollar. The recent US economic reports showcase a resilient job market, highlighting a sharp rise in wholesale inflation occurring despite aggressive Federal Reserve cuts anticipated in September.
As of the time of this report, the EUR/USD was sitting around 1.1653, down 0.45% for the day. The Euro was already under slight pressure, with Eurozone data failing to keep up momentum beyond the 1.1700 level. At the same time, the US Dollar Index (DXY), which measures the dollar’s value against a basket of six major currencies, made a modest recovery after hitting a two-week low and climbed back above the psychological threshold of 98.00.
In labor statistics, the U.S. Labor Bureau reported claims falling to 224K for the week ending August 8, which is lower than the expected 227K, down from the previous week’s 227K. Continued unemployment claims also dipped slightly, from 1.968 million to 1.953 million, just under the expected 1.96 million.
The PPI showed a remarkable jump in July, increasing 0.9% month-over-month, well above the expected 0.2% and the flat reading from June. This marked the largest monthly rise since June 2022.
Core PPI, which excludes food and energy prices, also went up by 0.9%, raising the annual rate to 3.7% from 2.6% in June, which was also much higher than the 0.2% estimate and the previous month’s flat reading, surpassing a consensus of 2.9%.
In the eurozone, preliminary figures from Eurostat indicated that the Gross Domestic Product (GDP) experienced a quarter-on-quarter growth of 0.1% in the second quarter, aligning with market expectations but not exceeding earlier estimations. Year-on-year, growth remained steady at 1.4%, consistent with projections.
Eurozone employment advanced by 0.1% quarter-over-quarter in the second quarter, meeting market expectations but slowing from the 0.2% uptick recorded in the first quarter. Annually, employment growth held at 0.7%, slightly exceeding the expected 0.6%, consistent with the previous quarter’s results.
On the industrial front, production in the eurozone decreased by 1.3% in June, a sharper decline than the anticipated 1.0% drop, essentially reversing the upward revision from May’s 1.1% increase from the initially reported 1.7%. Year-over-year, production growth significantly slowed to 0.2%, missing the forecast of 1.7% and down from a revised 3.1% seen in May, which underscores the ongoing vulnerabilities in the eurozone manufacturing sector.
