US FX WRAP: Dollar flat despite softer-than-expected PPI

USD was little changed against major peers on Thursday. A softer-than-expected PPI release saw bets on a Fed hold over a hike increase in response. However, USD held up despite the move lower in US 2yr yields, helped by the elevated geopolitical risk environment. Separately, weekly initial claims rose more than expected; however, current levels of around 200k remain unalarming. Meanwhile, Fed speak saw Hammack post PPI reiterate calls for rate hikes whilst Barkin remains uncertain on the future path of policy. DXY sits around 99.950, firmer from the WTD open of 99.590.

EUR and CAD were marginally firmer vs USD, whilst NZD and CHF continued to lag, albeit by small magnitudes. For NZD, 2yr inflation expectations in Q3 eased to 2.3% from 2.5%. Meanwhile, an in-line UK GDP reading (+0.4%) was met with a muted reaction in GBP/USD, which currently trades around 1.3487.

USD/JPY continues to hover on the 159 handle, now trading at 159.49. Today’s main update was a Bloomberg report that Japanese PM Takaichi’s government is said to support a faster BoJ rate hike.

EUR/NOK & USD/NOK are little changed from the levels seen before the Norges Bank decision to hold rates at 4.25% as expected. The CB kept the door open for further hikes in the future if needed. Focus turns to the next MPR and any accompanying adjustment to that guidance.