020 7898 0500It was a more positive day for the US dollar on Wednesday, even with the movements being dictated once again by sterling. Positivity surrounded the US dollar as the Producer Price Index (PPI) – an indicator of inflation – saw growth against expectation, posting its first positive figure in two months. Meanwhile, industrial production grew better than expected with its first positive figure in six months.
However the spotlight remained on the US Federal Reserve meeting minutes released late in the day. They were in line with expectations highlighting the uncertainty arising from the weak oil price, the poor performance of stock markets worldwide and concerns over the Chinese economy. The minutes made it clear that conditions had changed from those that existed in December when they increased interest rates but it also said it was too early to determine the impact these problems would have on the US economy and their ability to raise interest rates again this year. Wait and see seems to be the message.
We are expecting minimal data releases today with weekly unemployment claims due, which are expected to show another stable figure. However, the dollar still faces risk from an economy that is under potential recessionary pressure, and its strength could still be tested today.
