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Dollar Slides to May Lows

The US Dollar Index slid to a last May low of 101.50 on Wednesday on the back of poor retail sales and PPI data. Traders quickly reflected on Fed's Bullard hawkish comments, sending the index back above positive territories.

Chart: AUD/USD

Key Factors for Today:

• Dollar slides to a multi month low, but recovers quickly


• EUR/USD spikes to multimonth high on ECB narrative


• Pound nearly 1% higher as Core inflation persists


• Aussie reverses after jobs data disappoint


• Oil stockpiles continue to surprise to the upside

Dollar Lower on Poor Data but Recovered Swiftly

The 10-year US yield fell to lows not seen since September, with the dollar index sliding to lows of 101.50, not seen since last May. The move lower started before retail sales and PPI data release but accelerated as lower producer prices supported the disinflation narrative. The index recovered all intraday losses to close mixed after Fed's Bullard said he wanted the Fed to err on the tighter side of the 5.25-5.50% rate projection for the end of the year.

EUR/USD at 10-month high as 50bps Still on Table

ECB's Francois Villeroy was the first official to respond to press reports yesterday that the ECB was planning to slow the pace of rate hikes starting in March. He saw the terminal rate being reached in the summer. The report came ahead of the final EZ CPI figures showing decelerating headline inflation but a sticky core. EUR/USD ended the session 0.30% higher after putting in an April high, missing $1.09 and flirting with $1.08. $1.736 remains a crucial support.

Core Inflation Supports Pound Higher

Core yearly CPI change in the UK was 0.1% above expectations, with both annual and monthly headline figures in line. Still in double digits at 10.6%, the British Pound spiked nearly 1% higher on Wednesday but failed to reach the previous top at $1.2450 for a few pips. The print encouraged traders that the BOE would have to hike 50bps in its next monpol meeting. However, they were quick to take profits off the table, with $1.2280 back in focus.

Australian Jobs Trigger Aussie Reversal

Australia reported 14.6K job losses compared to the 25K gains expected. The unemployment rate also reported above expectations but unchanged from the prior month. Aussie responded with a reversal as trades encountered the event at the ceiling of 70c, with the AUD/USD pair already down 100 pips during Thursday's session. The pair was a decent 0.40% gain on Wednesday.

API Reports Another Huge Stockpile

The API's private survey said that US crude inventories grew by 7.6M bbl, with gasoline inventories growing by 2.8M bbl. Oil prices were further impacted following the release of US retail sales data, which was below consensus, marking a short-lived bias above the $80/bbl mark and closing Wednesday 2.45% lower. $82.40 and $76.30/bbl remain in the spotlight.

On the Docket

• Lagarde and Schnabel Speeches


• Phili Fed Manufacturing Index


• Initial Jobless Claims


• Fed Collins, Brainard and Williams Speeches


• WTI Oil EIA weekly report


• Japan Inflation Rate

FX 1-Day Relative Performance (USD)

• Yen gains 0.75% against greenback


• Aussie and kiwi down 0.55% and 0.36%


• Loonie, cable, euro and franc barely move


• Gold 0.23% up, but silver 0.56% down


• Crude and brent 1.44% and 1.20% lower

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