EURUSD
- EUR/USD is trading in a holding pattern as traders await the release of the latest U.S. inflation data for clues on future Fed interest rate moves.
- The currency pair traded mostly flat, hovering around 1.0960.
- ECB board member Isabel Schnabel stated that the European Central Bank will continue to raise borrowing costs until it sees core inflation decline sustainably, dismissing market expectations for rate cuts.
- The Fed delivered its tenth straight interest rate increase last week, but Chairman Jerome Powell indicated that the central bank may pause it’s tightening campaign in June if incoming economic data allowed.
- Market participants are closely monitoring the U.S. inflation data for indications of future monetary policy actions.
| SMA (1D) | Rising |
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| RSI (1D) | Neutral | |||
| MACD (1D) | Slightly Falling |  |
Closing statement: The currency markets are currently in a cautious mode, awaiting the release of key economic data to provide direction for the next trading moves.
GBPUSD
- GBP/USD rose 0.1% to 1.2627.
- The Bank of England is expected to raise interest rates by another 25 basis points to 4.5%.
- The U.S. dollar edged lower in early European trade Wednesday.
- The DXY, which tracks the dollar against six other currencies, traded flat this morning at 101.673.
- Huge volatility is not expected on the pound around the release of the inflation report, and GBP/USD could consolidate at levels above 1.25 in the aftermath of the BoE meeting.
GOLD
- Gold prices are up, buoyed by haven demand as investors grapple with uncertainty over the U.S. debt limit and slowing economic growth.
- A meeting between President Joe Biden and Republican policymakers on Tuesday failed to yield any progress on raising the federal debt limit, adding to concerns about the impasse and a June 1 deadline.
- Economists expect the core consumer price index, which excludes volatile food and fuel prices, to increase by 5.5% year-over-year and by 0.4% month-over-month.
- Gold has historically been seen as a hedge against inflation and rising inflation expectations may be contributing to the precious metal's recent gains.
- Gold prices are now trading above key support levels, with some analysts suggesting that further gains may be possible if the U.S. debt limit situation remains unresolved.
Closing statement: With uncertainty over the U.S. debt limit and inflation concerns still lingering, gold prices have continued to rise, suggesting that investors are increasingly seeking out haven assets to protect their portfolios.
CRUDE OIL
- Crude oil prices fell on Wednesday as an unexpected rise in U.S. oil inventories sparked demand concerns and investors awaited U.S. inflation data to gauge the next rate decision in the top oil-consuming nation.
- U.S. crude inventories rose by about 3.6 million barrels in the week ended May 5, indicating a possible sign of weakening demand.
- Lower crude imports and softer export growth in China in April also exacerbated worries about global oil demand.
- Russia's Energy Ministry reported that the nation's oil output reduction almost reached targeted levels in April.
- New York Fed President John Williams said inflation remains too high and that the central bank will raise rates again, if necessary, even though the U.S. central bank dropped guidance about the need for future hikes.
DAX
- European stock markets are expected to open marginally higher Wednesday as investors await key U.S. inflation data and earnings reports.
- DAX futures in Germany were down by 0.18%, CAC 40 futures in France fell by 0.17%, and FTSE 100 futures in the UK fell by 0.12%.
- DAX index stays below the 16,000 mark, which it briefly surpassed earlier in the week.
- German consumer prices rose 0.4% on the month in April, with an annual increase of 7.2%.
- Despite remaining elevated in the eurozone's largest economy, the increase in German consumer prices did not significantly impact market expectations.
