Daily summary: US dollar rebounds after latest data

The dollar index (DXY) has reversed over a quarter of the losses sustained during that period and is currently trading at levels seen in December.

The main reason for the US dollar's rebound is the hawkish repricing of rate hike expectations by the Fed in response to stronger US activity and inflation data at the beginning of the year.

• European indices erased early losses and finished yesterday's trading higher, with DAX adding 0.15%.

• Euro Area inflation eased further to 8.5% in February, compared with market consensus of 8.2%, while the core rate hit a fresh record high.

• ECB President Christine Lagarde said that rates will have to rise higher and stay higher for some time to combat inflation. Markets are fully priced for a ECB's 50 bp hike in March, and are flirting with another 50bp in May.

• ECB minutes showed that policymakers were split in their interpretation of inflation trends and the type of signal they should send about their next rate move.

• Wall Streert indices trade mixed, with Dow Jones gains 0.50%, S&P 500 hovers above the flatline, while NASDAQ fell 0.15% as investors digested latest claims and labor costs data, which pointed to potential emergence of wage spiral.

• US initial jobless claims 190K versus 195K estimate

• US Q4 unit labor costs +3.2% vs +1.6% expected

• Fed's Bostic: Fed may have to do more given high inflation. It is appropriate to be cautious so that the Fed does enough to control inflation but does not do more than we need to.

• Fed's Collins: Number of additional hikes will be determined by incoming data

• US 10-year yields hit 4.08% and moving towards 14-year high of 4.3% reached in October

• OIL.WTI pulled back from session highs at $78.60 and is currently testing local support at $77.80 as investors weighed hopes for a rebound in Chinese demand against concerns about further policy tightening from the Federal Reserve.

• NATGAS fell from a 1-month high at $2.85 as forecasts for less heating demand next week more than offset a bigger-than-expected weekly storage draw.

• Precious metals moved lower amid a stronger dollar. Gold oscillates slightly below flatline around $1836, while silver bounced off daily lows and managed to climb back above resistance at $20.80.

• The dollar index jumped above 105.00 after fresh US data raised bets that interest rates will need to stay higher for longer. EURUSD retreated towards major support at 1.0580.

• Cryptocurrencies trade lower partially pressured by Silver Capital solvency concerns, whose stock fell over 50.0%. Bitcoin dropped below local support at $23,400, while Ethereum retested the $1620 mark.