The US Dollar Index remained flat as discussions regarding a Ukraine ceasefire took place amongst US officials in Russia. Initial Jobless Claims for the week ending March 7 were reported at 220,000, below the expected 225,000, while the Continuing Jobless Claims dropped to 1.870 million, also under estimates.
The US Producer Price Index (PPI) for February showed no change, falling short of expectations. The yearly headline PPI decreased to 3.2%, below the consensus of 3.3%, reflecting concerns about demand potentially weakening.
Us Yields And Market Reactions
US yields climbed to a five-day high of 4.33%, driven by a shift from bonds to equities, consequently supporting the US Dollar. As the markets reacted to the PPI, equities experienced declines.
Looking ahead, traders project a 97% likelihood for no interest rate changes in March, while expectations for a rate cut in May stand at 28.1%. The technical outlook remains mixed, with potential resistance at 104.00 and support around 103.00.
With labour market data showing fewer-than-expected initial claims and a dip in continuing jobless claims, it’s clear that employment remains resilient. This suggests that consumer spending may hold steady, keeping inflation pressures from cooling too quickly. Meanwhile, the softer Producer Price Index (PPI) figures point towards milder wholesale inflation, which raises questions about whether demand is easing.
Bond markets saw movement as yields rose, reaching their highest level in nearly a week. This shift indicates investors adjusting positions, moving funds away from fixed-income assets and back towards equities. The equity pullback in response to the PPI data suggests that traders may be reconsidering their inflation and interest rate expectations. A higher yield environment typically provides support for the US dollar, which could explain why its value held firm despite broader economic uncertainties.
Technical Levels And Market Sentiment
Looking towards policy expectations, it appears traders are nearly unanimous in believing there will be no rate adjustments this month. However, the probability of a rate cut in May remains low, with just over a quarter expecting relief. This sentiment reflects an ongoing recalibration of monetary policy bets, with many awaiting stronger signals before committing to a firm stance.
From a technical standpoint, immediate barriers remain in place. Resistance appears to be forming near 104.00, where prior price rejections have occurred, while support around 103.00 provides a lower boundary. If movements breach these levels, it may shift near-term momentum. While short-term volatility may persist, especially as new data emerges, traders should consider how these figures reshape expectations for future monetary decisions.
