Key facts
- The dollar stabilized in Asian trade, reversing some of its prior decline as traders questioned the likelihood of an imminent Middle East ceasefire.
- U.S. producer prices rose more than anticipated in May, but the core reading suggested easing inflationary pressures.
- Market expectations for the Federal Reserve's next rate hike shifted towards December following the producer price data.
- The European Central Bank implemented its first interest rate increase in three years on Thursday.
- Brent crude oil prices declined amid emerging ceasefire prospects in the Middle East.
- Bitcoin and ether experienced slight increases in early trading.
The U.S. dollar found its footing in Asian trade, retracing some of its previous day's decline as traders questioned reports of an imminent Middle East ceasefire deal. President Donald Trump had previously halted planned U.S. strikes on Iran, suggesting a peace deal could be signed soon, which had initially weakened the dollar.
Data released Thursday showed U.S. producer prices increased more than expected in May, marking the largest annual gain in 3-1/2 years, partly due to rising energy costs from the Middle East conflict. However, the core producer price index, a key indicator for core inflation, came in below expectations, calming concerns about the Federal Reserve's inflation outlook. This led to a shift in market pricing, with expectations for the Fed's next rate hike moving towards December.
The euro held near a one-week high following the European Central Bank's first interest rate hike in three years on Thursday. The ECB implemented a 25-basis-point increase, with analysts noting hawkish revisions to inflation and growth forecasts, although future guidance on further hikes remained limited.
In cryptocurrencies, bitcoin edged up 0.5% to $63,645.84, while ether rose 0.4% to $1,676.83.