The US dollar remained strong on Thursday, supported by rising US Treasury yields, as investors increasingly priced in the possibility of Federal Reserve interest rate hikes later this year, while global markets focused on the two-day summit between US President Donald Trump and Chinese President Xi Jinping.

Xi told Trump that trade talks were making progress, but warned that disagreements over Taiwan could push relations onto a “dangerous path,” during a summit Trump described as potentially “the biggest summit ever.”

As the summit got underway, the Chinese yuan traded near its highest level in three years, while the offshore yuan rose for an eighth consecutive session against the dollar to 6.7845 yuan per dollar.

In broader markets, the dollar steadied on Thursday, leaving the euro little changed at $1.1717, though the single currency remains on track for a weekly loss of around 0.6%, its largest in two months.

The US dollar index, which measures the currency against a basket of major peers, climbed to 98.48 points, posting gains of more than 0.6% this week and heading for its strongest weekly performance since the outbreak of the Iran war.

Meanwhile, the dollar edged slightly lower against the Japanese yen to 157.87 yen, after the yen received support from comments by Bank of Japan board member Kazuyuki Masu, who said the Japanese central bank should move quickly to raise interest rates if there are no clear signs of economic slowdown.

Japanese authorities are believed to have intervened several times in recent weeks to limit dollar strength, but growing expectations for US rate hikes this year continue to pressure the yen, with the dollar recovering roughly half of its losses since Tokyo stepped in to support the local currency.

Inflation Data Supports the Dollar

The dollar’s rally accelerated this week after a series of reports showed mounting inflationary pressures within the US economy. The latest data on Wednesday showed US producer prices posted their largest increase in four years during April, just one day after data showed consumer inflation reached its highest level in three years.

Carol Kong, currency strategist at the Commonwealth Bank of Australia, said the recent inflation data “will not be welcomed by Federal Reserve officials, including incoming chairman Kevin Warsh.”

The US Senate confirmed Kevin Warsh as Federal Reserve chairman on Wednesday, placing him at the helm of the US central bank at a time of rising inflation risks.

Kong added that the bank expects a tightening cycle to begin in December, with three interest rate hikes anticipated during the current cycle.

According to CME Group’s FedWatch tool, the probability of a US rate hike in December rose to 31.8%, up from just over 16% a week earlier.

Shifting rate expectations and inflation concerns pushed long-term US Treasury yields to their highest levels since mid-2025, although the 30-year Treasury yield eased slightly to 5.029%.

The British pound, meanwhile, held steady against both the dollar and the euro after data showed the UK economy unexpectedly grew by 0.3% in March, suggesting the British economy may have remained relatively resilient amid the escalating Iran war.

Gold prices declined in European trading on Thursday, extending losses for the third consecutive session, under pressure from the continued strength of the US dollar in foreign exchange markets, especially as renewed inflationary pressures in the United States strongly reinforced expectations that the Federal Reserve could raise interest rates before the end of this year.

Global attention is focused on the summit between US President Donald Trump and Chinese President Xi Jinping, which began today in Beijing, where discussions are expected to include extending the trade truce between the world’s two largest economies, alongside complex geopolitical issues, most notably developments in the Iran war and the future of navigation through the Strait of Hormuz.

Price Overview

• Gold prices today: Gold prices fell 0.45% to ($4,668.70), from the opening level at ($4,689.29), and recorded a session high at ($4,718.77).

• At Wednesday’s settlement, gold prices lost 0.6%, marking a second consecutive daily decline, amid continued correction and profit-taking from the three-week high at $4,773.58 per ounce.

• Aside from profit-taking activity, gold prices declined following the release of strong US inflation data.

US Dollar

The dollar index rose more than 0.1% on Thursday, maintaining gains for the fourth consecutive session and reflecting continued strength in the US currency against a basket of major and minor currencies.

The dollar received additional support from rising US Treasury yields, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Trump-Xi Meeting

Global attention is focused on Beijing, where the historic meeting between US President Donald Trump and Chinese President Xi Jinping is taking place, amid Washington’s efforts to secure economic gains and preserve the fragile trade truce between the world’s two largest economies, alongside discussions on complex geopolitical issues, most notably the US-Israeli war against Iran and its regional and international implications.

Trump is expected to seek China’s assistance in pressuring Iran toward a peace agreement in the Middle East, though analysts believe he is unlikely to receive the support he wants.

US Interest Rates

• Data released this week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices recorded their strongest increase in four years, highlighting renewed inflationary pressures facing Federal Reserve policymakers.

• According to the CME Group’s FedWatch tool, markets are currently pricing in a 31.8% probability of a Federal Reserve rate hike in December, up from just over 16% a week ago.

• Pricing for keeping US interest rates unchanged at the June meeting increased from 96% to 99%, while pricing for a 25 basis point rate cut declined from 4% to 1%.

• To further reprice those expectations, investors continue closely monitoring upcoming US economic data, in addition to comments from Federal Reserve officials.

Gold Outlook

Peter Grant, vice president and senior metals strategist at Zaner Metals, said: “Inflation remains elevated, which has strengthened expectations for higher interest rates for longer, and that has pressured gold over the past two sessions.”

Brian Lan, managing director at GoldSilver Central, said: “Gold appears to be going through a consolidation phase at the moment, as everyone waits to see the outcome of the high-level talks between the United States and China.”

Lan added: “Gold is trending slightly lower, and I think this presents a good opportunity for investors looking to enter the precious metals market.”

SPDR Fund

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased on Tuesday by 1.71 metric tons, marking the fifth consecutive daily increase, bringing total holdings to 1,039.99 metric tons, the highest level since April 28.

The euro edged lower in European trading on Thursday against a basket of global currencies, extending its losses for the fourth consecutive session versus the US dollar, amid continued demand for the greenback as the preferred investment option, especially after US inflation data strengthened expectations for Federal Reserve rate hikes this year.

This comes as US President Donald Trump and Chinese leader Xi Jinping begin their summit in the first official visit by a US president to China in nearly a decade, with markets closely watching discussions on strengthening trade relations between the world’s two largest economies, alongside complex geopolitical issues, most notably developments in the Iran war and the future of navigation through the Strait of Hormuz and their impact on global energy markets.

Price Overview

• Euro exchange rate today: The euro fell less than 0.1% against the dollar to (1.1706$), from today’s opening level at (1.1711$), and recorded a session high at (1.1719$).

• The euro ended Wednesday’s trading down 0.25% against the dollar, marking its third consecutive daily loss, due to stalled US-Iran negotiations.

US Dollar

The dollar index rose 0.1% on Thursday, maintaining gains for the fourth straight session and reflecting continued strength in the US currency against a basket of global currencies.

The dollar received additional support from rising US Treasury yields, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Data released this week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices recorded their strongest increase in four years, highlighting renewed inflationary pressures facing Federal Reserve policymakers.

According to the CME Group’s FedWatch tool, markets are currently pricing in a 31.8% probability of a Federal Reserve rate hike in December, up from just over 16% a week ago.

Trump-Xi Meeting

Global attention is focused on Beijing, where the historic meeting between US President Donald Trump and Chinese President Xi Jinping is taking place, amid Washington’s efforts to secure economic gains and preserve the fragile trade truce between the world’s two largest economies, alongside discussions on complex geopolitical issues, most notably the US-Israeli war against Iran and its regional and international implications.

Trump is expected to seek China’s assistance in pressuring Iran toward a peace agreement in the Middle East, though analysts believe he is unlikely to receive the support he wants.

European Interest Rates

• With global oil prices rising this week, money markets increased pricing for a 25 basis point European Central Bank rate hike at the June meeting from 45% to 50%.

• To further reprice those expectations, investors are awaiting additional economic data from the eurozone on inflation, unemployment, and wages.

The Japanese yen declined in Asian trading on Thursday against a basket of major and minor currencies, deepening its losses for the fourth consecutive session versus the US dollar and hitting its lowest level in two weeks, amid strong demand for the greenback as the preferred investment option, especially after US inflation data strengthened expectations for additional Federal Reserve rate hikes this year.

This comes as US President Donald Trump and Chinese leader Xi Jinping begin their summit in the first official visit by a US president to China in nearly a decade, with markets closely watching discussions on strengthening trade ties between the world’s two largest economies, alongside complex geopolitical issues including the Iran war, the future of navigation through the Strait of Hormuz, and the impact on global energy markets.

Price Overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.1% to (157.99¥), the highest level since April 30, from today’s opening price at (157.85¥), and recorded a session low at (157.69¥).

• The yen ended Wednesday’s trading down 0.15% against the dollar, marking its third consecutive daily loss, after strong US producer price data.

US Dollar

The dollar index rose 0.1% on Thursday, maintaining gains for the fourth straight session and reflecting continued strength in the US currency against a basket of global currencies.

The dollar received additional support from rising US Treasury yields, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Data released this week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices recorded their strongest increase in four years, highlighting renewed inflationary pressures facing Federal Reserve policymakers.

According to the CME Group’s FedWatch tool, markets are now pricing in a 31.8% probability of a Federal Reserve rate hike in December, compared to just above 16% a week ago.

Trump-Xi Meeting

Global attention is focused on Beijing, where the historic meeting between US President Donald Trump and Chinese President Xi Jinping is taking place, amid Washington’s efforts to secure economic gains and preserve the fragile trade truce between the world’s two largest economies, while also discussing complex geopolitical issues, most notably the US-Israeli war against Iran and its regional and global implications.

Trump is expected to seek China’s help in pressuring Iran toward a peace agreement in the Middle East, though analysts believe he is unlikely to receive the level of support he wants.

Government Support

Kyodo News reported on Thursday that the Japanese government is considering preparing a supplementary budget to ease the burden on households from rising fuel costs, a move that could further pressure the country’s public finances.

According to unnamed government sources cited by Kyodo, the supplementary budget for the current fiscal year would support households expected to be affected by higher gasoline and utility bills during the peak summer season.

Japanese Interest Rates

• The summary of opinions from the Bank of Japan released on Tuesday showed a clear bias toward monetary tightening and preparations for an early interest rate hike, driven by rising inflation risks linked to the Middle East crisis and the Iran war.

• With oil prices continuing to rise, markets increased pricing for a quarter-point rate hike by the Bank of Japan at its June meeting from 55% to 60%.

• To further reprice those expectations, investors are awaiting additional data on inflation, unemployment, and wage growth in Japan.