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US Dollar Mixed on Tame Wholesale Inflation, Higher Mortgage Applications

March 14, 2019 at 18:50 by Andrew Moran

US dollar banknotes and coinsThe US dollar is mixed against a basket of currencies on Thursday, attempting to find direction on economic data. The greenback has been trading based on inflation numbers, mortgage loans, and weekly jobless claims, but data may not affect the buck until the US and China officially announce a new trade agreement.

According to the Department of Labor, the producer price index (PPI) – a measurement of price changes prior to reaching the consumer – rose only 0.1% last month, after dipping 0.1% in January. Wholesale prices surged 1.9%, compared to the same time a year ago, and core prices jumped 2.5%. When volatile energy and food costs are taken out of the equation, the PPI still advanced 0.1%.

This comes as the consumer price index (CPI) climbed a tepid 1.5% in February from last year. Despite a 48-year low unemployment rate and surging wage growth, inflation has been low, leaving the Federal Reserve no other choice but to keep interest rates low.

The Mortgage Bankers Association (MBA) reported that the average size of mortgages for consumers in the market to purchase a home or refinance their humble abode skyrocketed to an all-time high of $354,500 in the week ending March. The MBA’s seasonally-adjusted index of loan applications to acquire a home increased 4.3% to 250.8. The demand for mortgages was ostensibly boosted by a slip in mortgage rates.

Interest rates on 30-year mortgages averaged 4.45%, 30-year fixed-rate mortgages fell to 4.64%, and other fixed mortgage rates dropped as many as 0.06 percentage points.

Last week, the number of Americans submitting applications for jobless benefits rose more than expected, leaving some analysts thinking the roaring labor market is cooling down, especially with the lackluster job growth in February. The Labor Department said that initial claims for state unemployment benefits climbed 6,000 to a seasonally-adjusted 229,000 for the week ending March 9. This is more than the market forecast of an increase of 225,000 claims.

The USD/CAD currency pair advanced 0.19% to 1.3326, from an opening of 1.3302, at 18:29 GMT on Thursday. The EUR/USD traveled in the opposite direction, down 0.19% to 1.1305, from an opening of 1.3300.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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