USD/THB dives as markets digest US PPI figures and Powell’s words

Recent US PPI data for April from the US met expectations.
Jerome Powell's cautionary comments on inflation and stringent policy measures instill a sense of uncertainty surrounding the USD.
All eyes are on Wednesday’s CPI figures from the US.

Patricio Martín FXStreet

The USD/THB saw sharp losses on Tuesday, facing mixed influences from a robust US economy and cautious posture from the Federal Reserve (Fed). The US Producer Price Index (PPI) didn’t show surprises as markets gear up for Wednesday’s Consumer Price Index (CPI) report from the US.

On the US data front, the US PPI figures for April reinforced the US economic resilience showing a 2.2% year-on-year increase, in sync with market projections. Despite these robust indicators, cautiousness prevails with the Fed Chairman, Jerome Powell, maintaining a vigilant watch on inflation trends and emphasizing the need for pledging that rates may need to be kept higher for longer. Markets are betting, that the bank will start cutting in September and that a November cut is already priced in. However, the outcome of the CPI report might change those odds.

USD/THB technical analysis

The daily Relative Strength Index (RSI) of the USD/THB pair most recently recorded a level of 45. This RSI reading falls into negative territory, suggesting an elevation of selling momentum. The Moving Average Convergence Divergence (MACD) histogram prints red bars, indicating an increase in negative momentum for the USD/THB pair. The amalgamation of the negative RSI and negatively trending MACD implies a dominance of sellers in the market.

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.