US producer prices rose 0.5% in April, matching estimates and compared to March's 1.4% rise.

Core prices, excluding  food and energy, rose 0.4%, missing estimates of 0.6%, and down from 1% in the previous reading. 

US unemployment claims rose to 203 thousand in the week ending May 7, missing estimates of 190K and compared to the previous reading's 202K, revised from 200K.

Euro is about to trade below 1.04 against dollar for the first time in five years, with analysts expecting 20-year lows soon, but why? we explain in this report. 

EUR/USD

EUR/USD fell 1.05% today to 1.0401, the lowest since January 2017, with a session-high at 1.0529.

The Fuel Crisis

As Russian gas supplies decline by a quarter to Europe after Ukrainian troops stopped the usage of a main pipeline.

The tumble in supplies spread some panic, as it's the first time for such an event to occur since the Russian invasion of Ukraine.

Inflationary Recession

The European economy now genuinely faces an inflationary recession risks, with consumer prices at record lows as GDP growth halts.

Such events will put huge pressure on the ECB and all but rule out a rate hike soon.

The ECB

The ECB's hands are highly tied right now, despite the runaway inflation, with analysts now expecting no rate hikes this year.

Even after deciding to hike rates, the ECB asserted it'll continue its assets purchases to support the economy.

The Dollar

The dollar index rose 0.5% on Thursday for the sixth straight session, hitting a 2002 high at 104.54 against major rivals. 

The gains are bolstered by very high inflation data for the UK last month, paving the way for several more 0.5% Fed rate hikes this year. 

Policy Divergence 

This we see a serious monetary policy divergence between Europe and the US, leading to the current extreme tumble in euro's standing. 

Estimates

Now analysts expect euro to fall as far as 1.0340 against dollar soon, and potentially hit parity in the next few months.

As the European economy continues to face serious growth risks, the euro is expected to continue suffering throughout the year, and potentially hitting 2002 lows. 

Gold prices declined in European trade on track to hit three-month highs as the dollar index rallied to fresh 20-year highs following strong US inflation data.

Gold Prices Today

Gold prices fell over 0.4% to $1,843 an ounce , after closing up 0.75% on Wednesday, away from a three-month low at $1,832.

US Dollar

The dollar index rose 0.5% today for the sixth straight session, hitting 2002 highs at 104.54.

Dollar's gains are weighing on gold prices and making them more expensive to holders of other currencies.

The inflation data for the US bolstered the case for multiple 0.50% rate hikes by the Federal Reserve throughout the year.

Estimates

Analysts expect gold to give up $1,830 and potentially tumble below $1800 if the dollar expanded its gains.

The SPDR

Gold holdings at the SPDR Gold Trust fell 2.03 tones yesterday to a total of 1,066 tones, the lowest since March 15.