The US Dollar (USD) mounted a recovery on Wednesday, reversing earlier losses as investors reduced exposure to risk-sensitive assets. This shift occurred amidst sustained optimism regarding US trade policies. The Greenback’s resurgence transpired despite renewed expectations for potential interest rate reductions by the Federal Reserve later in the year, spurred by indications of moderating inflation figures for April. The market is carefully weighing the possibility of future rate adjustments against the backdrop of ongoing trade developments and their potential impact on economic growth.
Here is what you need to know on Thursday, May 15:
The Dollar Index (DXY) rebounded from Tuesday’s decline, retesting levels above the 101.00 threshold as US Treasury yields experienced further gains across the maturity spectrum. A series of significant US economic data releases are scheduled, including Retail Sales figures, Producer Price Index (PPI) data, the Philadelphia Fed Manufacturing Index, reports on Industrial and Manufacturing Production, Business Inventories, the NAHB Housing Market Index, and the customary weekly Initial Jobless Claims. Furthermore, Federal Reserve Chairman Jerome Powell is scheduled to deliver a speech, preceding remarks from Vice Chair for Supervision Barr. Market participants will be closely scrutinizing these data points and speeches for insights into the health of the US economy and the Federal Reserve’s monetary policy outlook.
EUR/USD retreated to the 1.1170 area, despite having reached weekly highs above the 1.1200 level earlier, reacting to initial weakness in the US Dollar. Upcoming data releases from the Eurozone include German Wholesale Prices, followed by Eurozone Employment Change figures and the second estimate of the Q1 GDP Growth Rate. These figures will provide a crucial update on the economic performance of the Eurozone and its constituent economies, influencing expectations for the European Central Bank’s (ECB) policy decisions.
GBP/USD failed to maintain its upward momentum towards multi-day highs near 1.3360, subsequently declining to the 1.3250 area amid notable losses. A data-rich UK economic calendar includes the release of the preliminary Q1 GDP Growth Rate, alongside figures for Business Investment, Goods Trade Balance, Industrial and Manufacturing Production, Construction Output, and Labour Productivity. In addition, Bank of England (BoE) policymaker Dhingra is scheduled to speak. The comprehensive set of UK economic indicators will be carefully assessed to gauge the strength of the UK economy and inform expectations regarding future monetary policy actions by the Bank of England.
USD/JPY experienced a sharp decline to the 145.60 area, marking a three-day low, influenced by a weaker US Dollar and rising yields in both the US and Japan. Upcoming data releases include Foreign Bond Investment figures and Machine Tool Orders. Investors are monitoring these indicators for insights into capital flows and the health of the Japanese manufacturing sector, which could influence the Bank of Japan’s (BoJ) monetary policy stance.
AUD/USD briefly revisited the 0.6500 level, before succumbing to selling pressure and ending the day significantly lower. The Australian economic calendar features the release of the key labour market report, followed by Consumer Inflation Expectations data. These figures are crucial for assessing the state of the Australian economy and will likely influence the Reserve Bank of Australia’s (RBA) future policy decisions regarding interest rates.
WTI crude oil prices edged down slightly but remained near recent highs in the vicinity of $64.00 per barrel, supported by an increase in US crude oil supplies. Market participants are closely monitoring inventory levels, geopolitical developments, and global demand trends for further direction in oil prices.
Gold prices traded defensively, extending their ongoing decline and reaching five-week lows near $3,170 per ounce troy, primarily driven by persistent optimism surrounding trade developments. Silver prices also retreated, falling to two-day lows near the $32.00 mark per ounce amid continued volatility in price action. Precious metals are often seen as a safe-haven asset, and their performance is closely linked to investor sentiment regarding global economic risks and trade uncertainties.
