The US dollar fell in European trade on Thursday, resuming the cycle of downward correction away from a five-week high as US 10-year treasury yields slowed down.

Now investors await crucial US data and remarks by Fed Chair Jerome Powell later today, expected to provide important clues on the path ahead for US interest rates.

The Index

The dollar index fell 0.4% today to 100.59, with a session-high at 101.06.

On Wednesday, the index rose 0.1% after a 0.85% drop on profit-taking away from a five-week high at 101.98.

US Yields 

US 10-year treasury yields fell 0.9% on Thursday away from a five-week high at 4.548%, pressuring the greenback.

Fed Remarks 

Chicago Fed President Austin Goolsby said the recent data that showed lower inflation doesn’t necessarily reflect the impact of the new US tariffs on imports, and the Fed requires more data to gauge the path ahead clearly.

Fed Deputy Governor Philip Jefferson said that latest inflation data shows progress towards achieving the 2% inflation target.

However, he believes the outlook has become unclear due to the latest tariffs and their potential impact on prices.

 According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in June stood at just 8%, and the odds of such a cut in July stood at 40%.

Traders are now pricing in 50 basis points of US interest rate cuts this year, likely starting next September.

Federal Reserve Chair Jerome Powell is scheduled to speak later today in Washington and could provide clues on the bank’s future monetary policy and thinking.

Gold prices fell in European trade on Thursday on track for the second loss in a row, plumbing five-week lows on weak haven demand as the US-China trade tensions cooled. 

The losses are stymied by the weaker dollar against major rivals, as investors await Fed Chair Powell’s remarks, and important US data later today.

Prices

Gold prices fell 1.8% today to $3120 an ounce, an April 10 low, with a session-high at $3192.

On Wednesday, gold lost 2.2%, the second loss in three days on haven demand.

Trade Developments 

The US and China agreed to pause most tariffs for 90 days, in turn reducing the severity of the recent devastating trade war.

US Dollar

The dollar index fell 0.4% on Thursday away from a five-week high against a basket of major rivals.

A weaker dollar makes the greenback-denominated gold futures cheaper to holders of other currencies.

US Rates

Chicago Fed President Austin Goolsby said the recent data that showed lower inflation doesn’t necessarily reflect the impact of the new US tariffs on imports, and the Fed requires more data to gauge the path ahead clearly.

Fed Deputy Governor Philip Jefferson said that latest inflation data shows progress towards achieving the 2% inflation target.

However, he believes the outlook has become unclear due to the latest tariffs and their potential impact on prices.

 According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in June stood at just 8%, and the odds of such a cut in July stood at 40%.

Traders are now pricing in 50 basis points of US interest rate cuts this year, likely starting next September.

Federal Reserve Chair Jerome Powell is scheduled to speak later today in Washington and could provide clues on the bank’s future monetary policy and thinking.

SPDR

Gold holdings at the SPDr Gold Trust remained unchanged at 936.51 tons, the lowest since April 8.

Sterling rose in European trade on Thursday against a basket of major rivals, resuming gains against the US dollar after a short hiatus and on track for a week high ahead of important UK growth data.

The data will likely provide important clues on the odds of a UK interest rate cut in June amid current division in the Bank of England on the path ahead for monetary easing.

The Price

The GBP/USD price rose 0.2% today to $1.3287, with a session-low at $1.3258.

The pound lost 0.35% on Wednesday against the dollar on profit-taking away from a week high at $1.3361.

UK Rates

Last week, the Bank of England cut interest rates by 25 basis points to 4.25%, the lowest since March 2023, marking the fourth such UK rate cut since the current cycle of policy easing started in August 2024.

The vote split was unexpected, with 5 members voting in favor of the cut and 2 voting in favor of a deeper 0.5% cut, while two voted in favor of holding rates unchanged.

 The odds of a UK 0.25% interest rate cut in June stood at 30%.

UK Growth

Now investors await important UK GDP growth data later today, expected to highly impact the monetary policy decision.

UK GDP growth is expected at 0.6% in the first quarter, up from a 0.1% rise in the previous quarter.

The Australian dollar rose in Asian trade on Thursday against a basket of major rivals, resuming gains against the US dollar and approaching a five-month high following strong Australian data.

The data renewed the pressure on the Reserve Bank of Australia’s policymakers and tanked the odds of a rate cut next week.

The Price

The AUD/USD price rose 0.4% today to $0.6458, with a session-low at $0.6422.

The pair lost 0.65% on Wednesday away from a week high at $65.02, and after marking a five-month high at 65.15 last week.

Australian Labor Sector 

Australia's unemployment rate was unchanged in April at 4.1%, same as March, and matching expectations.

The Australian economy added 89.0 thousand new jobs in April, easily beating estimates of a 20.9 thousand addition, while March's reading was revised to show the addition of 32.2 thousand jobs instead of 36.4 thousand.

The data renewed inflationary pressures on the Reserve Bank of Australia’s policymakers, which hurt the odds of a rate cut in May.

The RBA held interest rates unchanged at 4.1% at the previous April meeting but opened the door for a May rate cut.

The current odds of such a rate cut by the RBA in May currently stand at 75%.

The recent reduction of global trade tensions led analysts to reduce their expectations for Australian rate cuts this year.

The markets now expect the RBA to cut rates to 3.1% by the end of the year, up from 2.85% in previous forecasts.