US Dollar Extends Gains as Markets Focus on Economic Data and Trump-Xi Talks
The U.S. dollar strengthened for a fourth consecutive trading session on Thursday as fresh economic data reinforced expectations that the Federal Reserve is unlikely to cut interest rates this year.
At the same time, investors closely monitored ongoing discussions between U.S. President Donald Trump and Chinese President Xi Jinping during their high-profile summit in Beijing.
The U.S. dollar index, which measures the greenback against a basket of major currencies, rose 0.14% to 98.60. The euro slipped 0.13% to $1.1695 as the dollar remained on track for its longest winning streak since late March.
Strong Retail Sales and Inflation Data Support the Dollar
Economic data released Thursday pointed to continued resilience in the U.S. economy.
According to the Commerce Department, retail sales increased 0.5% in April, matching economist expectations after a revised 1.6% gain in March.
Analysts noted that consumer spending remains surprisingly strong despite rising caution among households.
Karl Schamotta, chief market strategist at Corpay, said markets saw little surprise in the latest economic data.
He noted that while consumers continue expressing concerns about the economy, spending behavior remains relatively stable.
Job Market Remains Stable Despite Slight Increase in Claims
Additional data from the Labor Department showed that weekly initial jobless claims increased by 12,000 to 211,000.
Although the figure came in slightly above analyst forecasts of 205,000, it still pointed to a stable labor market with relatively low layoffs.
The resilient employment environment has continued supporting expectations that the Federal Reserve will maintain higher interest rates for longer.
Import Prices Surge as Inflation Concerns Intensify
Inflation pressures also remained a major focus for investors.
The Labor Department reported that import prices rose 1.9% in April, significantly above market expectations of 1.0%.
The increase followed a revised 0.9% rise in March and marked the strongest fuel price increase in four years.
The latest data added to inflation concerns already fueled by strong consumer and producer price readings earlier this week.
Markets have now largely ruled out the possibility of Federal Reserve rate cuts this year, while expectations for a potential rate hike in 2027 are gradually increasing.
Fed Officials Warn About Persistent Inflation Risks
Jeffrey Schmid said inflation remains the biggest risk facing the U.S. economy, despite what he described as “remarkable resilience” in economic activity and employment.
Meanwhile, the U.S. Senate officially approved Kevin Warsh as the next Federal Reserve chair. Final paperwork from the White House is still pending before he formally assumes the role.
The leadership transition comes as policymakers face increasing pressure to balance inflation control with slowing global growth concerns.
Oil Prices Stay Elevated Amid Iran Conflict
Energy markets also remained volatile as geopolitical tensions involving Iran continued disrupting global oil flows.
U.S. crude oil prices edged up 0.11% to $101.13 per barrel, while Brent crude traded slightly lower at $105.57 per barrel.
Oil prices briefly pulled back after the Financial Times reported that Saudi Arabia had proposed a non-aggression pact involving Iran.
However, concerns surrounding the Strait of Hormuz continue keeping energy markets on edge.
Iranian state media reported that approximately 30 vessels had recently crossed the Strait of Hormuz, a key shipping route responsible for roughly one-fifth of global oil transportation.
Dollar Weakens Against Chinese Yuan
Despite broad strength against most major currencies, the dollar continued weakening against the offshore Chinese yuan.
The U.S. currency slipped 0.03% to 6.784 yuan and remained on track for its eighth consecutive daily decline against China’s currency.
During the summit, Xi stated that trade discussions with Trump were progressing, although he warned that disagreements over Taiwan could potentially destabilize relations between the two countries.
Yen and Pound Remain Under Pressure
Against the Japanese yen, the dollar gained slightly to 157.88.
Earlier in the day, Kazuyuki Masu suggested that the Bank of Japan should consider raising interest rates if there are no clear signs of economic slowdown.
Japanese authorities are also believed to have intervened in currency markets recently to slow the yen’s decline.
Meanwhile, the British pound weakened 0.12% to $1.3506 and remained on track for a fourth straight daily loss amid growing political turmoil in the United Kingdom.
Labour politician Wes Streeting resigned as health minister while calling for a leadership challenge against Prime Minister Keir Starmer.
