US PPI and Unemployment Data Released

The Producer Price Index (PPI) data for November in the U.S. has been released. The PPI increased by 0.4% on a month-on-month basis, exceeding expectations of 0.3%. The annual PPI recorded a 3% increase, which is above the market expectation of 2.6%. Excluding food and energy, the annual PPI rose by 3.4%, while the expectation was 3.3%. This data indicates that the increase in production costs has surpassed expectations. The overall upward trend of the PPI in November is considered a sign that economic activities are continuing.

Increase in Unemployment Claims During the same period, unemployment claims data in the U.S. was also shared with the public. Weekly unemployment claims were announced at 242,000, showing an increase compared to the previous period and surpassing the prior expectation of 224,000. Continuing unemployment claims also rose to 1.886 million. This increase in the labor market indicates that the job market is still under some pressure, but is considered an important indicator for the continuity of overall economic growth. Changes in unemployment claims provide clues about the health of the economy.

Volatile Movements in the Dollar Index Following the PPI data exceeding expectations, the DXY displayed an unstable appearance, fluctuating between 106.58 and 106.84. In light of these data, expectations for the Fed to lower interest rates next week remain strong, while the dollar index is attempting to establish a base above 106.5. The initial unemployment claims rising to their highest level in about two months was interpreted as a surprise by the market. Additionally, the headline producer price index increased more than expected, but the core index slowed in line with expectations. The likelihood of the Fed implementing a 25-basis point rate cut next week remains steady at around 95%.

Weak Trend in EUR/USD Meanwhile, the ECB moved in line with expectations by reducing borrowing costs by 25 basis points for the fourth time this year. The euro continues to show a downward trend against the dollar, and attempts to rise above the 1.05 level during trading slowed down depending on the statements in the policy decision text, causing EUR/USD to decline slightly toward the 1.0468 levels. A notable interest rate decision of the day came from the Swiss National Bank, which reduced rates by a larger-than-expected 50 basis points. Following this decision, the Swiss franc fell sharply against the dollar. The USD/CHF pair approached the 0.89 level with a half-point increase on a daily basis.