US PPI and Job report to watch after disappointing UK GDP and hot US inflation

The dollar was up on Thursday morning in Asia as US inflation eased less than expected, keeping the US Federal Reserve on course to tighten monetary policy aggressively. The headline CPI reading for April was 8.3% in the US, higher than the expected 8.1% and down from last month's 8.5% reading.

The Fed's tightening policies have investors concerned about a recession. This was reflected in the 10-year US government bond yields extending their decline to 2.90%. Treasuries have been steady in Asia, but selling at the short end and a rally at the longer end have flattened the yield curve as investors prepare for near-term hikes to hurt long-term growth.

Cryptos crash

As a result of the rising interest rate outlook, the US dollar is strengthening, and riskier assets, which have skyrocketed through two years of low-interest rates and stimulus, are taking the heaviest hit. On Thursday, Bitcoin fell to its lowest level in 16 months, prompting a rush out of risk assets, such as tech stocks. The world's largest cryptocurrency has dropped to its lowest value since December 28, 2020, which has fallen as low as $26,000. In the last eight days, there has been a 30% loss in the value of bitcoin, or $13,000. Likewise, the rest of the crypto markets are also in turmoil, highlighted by the collapse of the so-called stablecoin TerraUSD.

Events of today

On the data front, the US will release the Producer Price Index and initial jobless claims later today. San Francisco Fed President Mary Daly will speak on the same day.

UK GDP growth reports were released this morning. As a result of weaker-than-expected figures, the British pound fell to 1.22. According to the report, the UK economy contracted by 0.1% in April. As well, flash GDP growth in the first quarter of this year was estimated at 8.7%, higher than the 6.6% growth in the winter of 2021 but lower than the 9% forecast. Likewise, the industrial production index in March decreased by 0.2% and failed to meet the 0.1% growth forecast. While a 0.2% decline in March, industrial production improved on last month's 0.4% decline and a -0.5% forecast.

The weekly jobless claims report and producer price index in the United States are among the most important data on Thursday. Initial jobless claims are expected to fall by 5,000 to 195,000 compared to the previous week.

Also, market participants expect the producer price index to drop from 1.4% in March to 0.5% in April.

The dollar is currently the strongest currency on the market. Investors' reliance on the greenback has put pressure on other major currencies and precious metals.