US dollar tries to rebound ahead of crucial data
The US dollar rose in European trade on Thursday for the first time four days against a basket of major rivals, while trying to recoup from two-week lows on short-covering.
The gains come as concerns about US financial stability receded after the Republican-dominated House of Representatives passed Trump’s tax reform bill and sent it to the Senate.
Now investors await crucial US data later today, which could provide important clues on the path ahead for Fed interest rates.
The Index
The dollar index rose 0.25% today to 99.87, with a session-low at 99.44.
On Wednesday, the index lost 0.3%, the third loss in a row, plumbing two-week lows at 99.34 on concerns about US financial stability.
Fiscal Developments
The House of Representatives passed Trump’s tax reform bill in a huge victory for Republicans despite internal divisions, with the bill subjected to dozens of amendments to gain the support of ultra-conservative lawmakers.
The bill enacts huge tax cuts and raises the ceiling of the state and local tax deductions to $40,000, and imposes labor conditions on Medicaid beneficiaries starting 2026.
Despite passing the bill in the House, it still faces a complex path in the Senate as some Republicans there might demand even more changes.
US Rates
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
Atlanta Fed President Raphael Bostic said earlier this week that he’s leaning towards a single interest rate cut this year.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
Now traders await a host of important US data later today, including unemployment claims and PMI data.
Gold expands gains to two-week high as dollar weakens
Gold prices rose in European trade on Thursday on track for the fourth profit in a row, hitting a two-week high as the dollar weakened against major rivals.
It comes after the US credit rating downgrade, which renewed concerns about the US financial stability and raised the challenges facing US policymakers.
The Price
Gold prices rose 0.9% today to $3345 an ounce, a May 9 high, with a session-low at $3309.
On Wednesday, gold rose 0.75%, the third profit in a row, as the dollar weakened against major rivals.
US Dollar
The dollar index fell 0.2% on Thursday on track for the fourth daily loss in a row, trading near a two-week trough at 99.34 against a basket of major rivals.
US President Donald Trump convened with his Republican allies in the House of Representatives but failed to convince them to support his tax reform bill, with hawks insisting the bill doesn’t cut spending far enough.
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
Atlanta Fed President Raphael Bostic said earlier this week that he’s leaning towards a single interest rate cut this year.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
SPDR
Gold holdings at the SPDR Gold Trust fell by 1.72 tons on Wednesday to a total of 919.88 tons.
Bitcoin continues to shatter records above $110,000
Bitcoin rose on Thursday and expanded the gains for the third straight session, shattering new records after surpassing $110,000 for the first time ever.
It comes amid a huge surge on crypto assets amid optimism about US regulatory conditions that would be supportive to the industry.
The Price
Bitcoin rose 2% at Bitstamp to $111,888, a record high, with a session-low at $109,252.
On Wednesday, bitcoin rose 2.65%, the second profit in a row following a new round of corporate purchases.
Crypto Market Value
The market value of cryptocurrencies rose by over 110 billion on Thursday to a total of $3.629 trillion, a January high.
Bitcoin as a Safe Haven
Bitcoin is emerging as a haven for investors looking for alternatives to traditional US assets, which are facing severe fluctuations currently.
Concerns about the massive US fiscal deficit and lower demand on US treasury notes are bolstering shifts towards crypto assets such as bitcoin.
US Fiscal Developments
US President Donald Trump convened with his Republican allies in the House of Representatives but failed to convince them to support his tax reform bill, with hawks insisting the bill doesn’t cut spending far enough.
Weak demand on a recent US 20-year treasury note auction, and the “Sell America” mindset, also piled up on the dollar and Wall Street.
The markets are already on edge after Moody’s decision to cut the US credit rating by one notch.
Crypto trading platform Nexo’s co-founder Anthony Trenchef hailed a new period of optimism for bitcoin as it passed its January highs and rose over 50% from April lows.
He believes that bitcoin is entering its best historical years yet, with the $150,000 remaining a viable goal in 2025.
Sterling hovers near three-year peak before crucial data
Sterling rose in European trade on Thursday and expanded the gains for the fourth straight session against the US dollar, trading near a three-year high.
UK consumer prices rose by the fastest pace in 14 months, renewing inflationary pressures on Bank of England policymakers and hurting the odds of a rate cut in June.
Now traders await crucial UK data later today that will provide clues on the pace of GDP growth in the second quarter of the year.
The Price
The GBP/USD price rose 0.2% today to $1.3441, with a session-low t $1.3405.
The pound rose 0.2% on Wednesday against the dollar, the third profit in a row, scaling a three-year peak at $1.3469 following hot UK inflation data.
US Dollar
The US dollar index fell 0.2% on Thursday on track for the fourth loss in a row, trading near a two-week trough at 99.34 against a basket of major rivals.
US President Donald Trump has so far failed to convince his Republican allies to pass his aggressive tax reform bill, with investors also growing concerned that US officials might try to weaken the dollar in current G7 talks in Canada.
UK Rates
UK consumer prices rose 3.5% y/y in April, up from 2.6% in March, and passed estimates of a 3.3% rise.
The data renewed inflationary pressures on the Bank of England policymakers, and tanked the odds of a June 0.25% rate cut from 25% to 15%.
Now traders await important UK data on various sectors to gather even more clues on the second quarter performance.
The UK GDP grew by a brisk 0.7% in the first quarter, beating estimates of a 0.6% rise and compared to the 0.1% growth rate in the last quarter of 2024.