BOE Interest Rate Decision, U.S. Core PPI, Unemployment Claims

The euro ended Wednesday moderately higher, posting a 0.16% gain against the dollar, following slowing inflation data that gave traders more confidence that the Federal Reserve is done with rate hikes for now.

The U.S. will publish unemployment claims data and producer price reports on Thursday, which could further indicate that the labour market is improving and inflationary pressures from wages are cooling down.

Fed funds futures traders are pricing in a pause in rate hikes in the upcoming meeting and possible rate cuts in September.

Gold prices moved slightly lower in a subdued trading session on Wednesday, closing the day 0.24% lower, with prices looking steady as U.S. inflation data points to possible monetary policy easing by the Federal Reserve.

U.S. consumer price index inflation grew at a slightly slower-than-expected annual pace through April but remained well above the Fed’s annual target range. Inflation also increased as expected monthly, indicating that price pressures remain elevated in the country.

Despite signs of easing inflationary pressure, the possibility of an economic slowdown in the country seems to be keeping the yellow metal supported above $2,000, amid steady safe-haven demand.

WTI oil fell by almost 1% on Wednesday, breaking a series of consecutive daily gains on intensifying concerns about the health of the Chinese economy and weaker-than-expected Chinese economic signals.

Chinese consumer price index showed that inflation barely grew in April, while producer price index inflation fell to multi-year lows. In addition, weak trade balance data earlier this week and declining oil shipments to China, signalled that demand in China is weak. It remains to be seen whether an economic recovery in the country will drive oil demand higher this year.

Investors now wait for the monthly oil report from the Organization of the Petroleum Exporting Countries (OPEC) due on Thursday for clues on whether the group and its allies will cut output again to boost prices.

The main stock market indices in the U.S. showed mixed results on Thursday, with the US 30 posting minor losses in a subdued session, the US 500 moving slightly higher, and the US tech 100 gaining more than 1.1% after a report showed evidence that inflation in the United States was cooling, even if it is still way higher than the Fed’s target.

The Labour Department's Consumer Price Index (CPI) rose 4.9% in April from a year ago, compared with expectations of a 5% increase, raising hopes that the Federal Reserve's interest rate hiking cycle is close to an end. Monthly CPI in April rose 0.4% after gaining 0.1% in March.

In the spotlight for Thursday, is the monthly PPI report, the jobless claims data, while some price action could also be seen when Fed members speak about financial stability and climate change later today.