Dollar under pressure ahead of inflation data, Powell's speech
Dollar fell in European trade on Tuesday against a basket of major rivals, on track for the second loss in a row, under pressure from lower US treasury yields, which undermine the dollar's standing.
Now investors await important US inflation data, in addition to Fed Chair Jerome Powell’s speech this week, to look for clues on the future of monetary policy.
The Index
The dollar index fell 0.1% today to 105.18, with a session-high at 105.35.
The index fell 0.1% yesterday, the second loss in three days as demand slowed down.
US Yields
US 10-year treasury yields fell by 0.4 basis points on Tuesday on track for the second loss in a row, which provides support for non-yielding assets.
The developments came ahead of crucial US inflation data for April, in addition to Fed Chair Jerome Powell’s speech this week.
US Rates
The markets are pricing in a 3.5% chance of a June Fed rate cut, and a 25% chance of a July cut, and a 63% chance of a September cut.
According to the Fedwatch tool, the markets expect two Fed interest rate cuts this year in September and November.
US Inflation Data
Later today, US producer prices data will be released for April, while tomorrow, US consumer prices data is scheduled for release, and it’ll be crucial for gauging the likely path ahead of monetary policies.
Powell
Fed Chair Jerome Powell is expected to speak in Amsterdam later today, and will take audience questions on the future of inflation and interest rates.
Gold climbs ahead of inflation data, Powell's speech
Gold prices rose in European trade on Tuesday, resuming gains after a short hiatus, as US 10-year treasury yields slowed down.
Investors are looking for fresh clues on this year’s interest rate cuts by the Federal Reserve, as investors await crucial US inflation data and Fed Chair Jerome Powell’s speech.
Prices
Gold prices rose 0.4% today to $2345.99 an ounce, with a session-low at $2334.
The precious metal lost over 1% on Monday, the first loss in three days away from a two-week high on Friday at $2378.
US 10-year treasury yields fell by 0.4 basis points on Tuesday on track for the second loss in a row, which provides support for non-yielding assets.
The developments came ahead of crucial US inflation data for April, in addition to Fed Chair Jerome Powell’s speech this week.
US Rates
The markets are pricing in a 3.5% chance of a June Fed rate cut, and a 25% chance of a July cut, and a 63% chance of a September cut.
According to the Fedwatch tool, the markets expect two Fed interest rate cuts this year in September and November.
US Inflation Data
Later today, US producer prices data will be released for April, while tomorrow, US consumer prices data is scheduled for release, and it’ll be crucial for gauging the likely path ahead of monetary policies.
Powell
Fed Chair Jerome Powell is expected to speak in Amsterdam later today, and will take audience questions on the future of inflation and interest rates.
The SPDR
Gold holdings at the SPDR Gold Trust remained flat yesterday at 831.93 tonnes, a week high.
Yen tumbles to two-week lows, triggering concerns of official Japanese intervention
Yen fell in Asian trade on Tuesday against a basket of major rivals, sharpening losses for the third straight session against the dollar and plumbing two-week lows, triggering concerns of yet another intervention by Japanese authorities.
Yen is approaching the red line that the Bank of Japan seemed to have demarcated with serious intentions to intervene in order to defend.
Otherwise, traders await important US inflation data this week, which will provide important clues on the future of monetary policy.
The Pair
The USD/JPY pair rose 0.2% to 156.50 yen, the highest since May 1, with a session-low at 156.12.
The yen lost 0.3% against the dollar yesterday, the second loss in a row as markets focus on the Japan-US interest rate gap.
The 160 Red Line
The 160 has become a red line for the Bank of Japan, so it’s likely it’ll intervene if the USD/JPY pair threatens to fall once again below.
Japanese authorities intervened last week and pumped $60 billion in the forex market to bring the yen higher against main rivals after it hit 1990 lows.
Japanese Government
Japan’s finance minister Shinuchi Suzuki said the government will work closely with the Bank of Japan to monitor the forex market and ensure stability.
He added the government is also monitoring interest rates closely when asked about his reaction to the BOJ’s sudden decisions to cut the amount of government bonds it purchased this week.
The IMF
The International Monetary Fund said that Japan should allow the yen to move flexibly, which would help the BOJ to focus on stabilizing prices through monetary measures.
US Inflation
Later today, US producer prices data will be released for April, while tomorrow, US consumer prices data is scheduled for release, and it’ll be crucial for gauging the likely path ahead of monetary policies.
Copper extends gains in challenge to global geopolitical concerns
Copper prices rose on Monday as the dollar inched down against most major rivals despite ongoing geopolitical tensions.
Copper is considered a highly sensitive metal to global economic conditions due to its widespread industrial applications.
Copper rallied to two-week highs on strong global demand, driven by higher growth especially from renewable energy sectors.
And the higher demand comes at a time of noticeably lower supplies as major producers in South America curtail production.
The International Copper Association expects copper demand to rise from 28.3 million tonnes in 2020 to 40.9 million tonnes by 2040, with a 1.8% compounded growth rate.
Copper is particularly boosted by the global trends in favor of renewable energy sectors, with the metal playing an important role in supporting such industries.
Otherwise, the dollar index fell 0.1% as of 16:38 GMT to 105.2, with a session-high at 105.3, and a low at 105.06.
On trading, copper July futures rose 1.6% as of 16:33 GMT to $4.73 a pound.