Cisco Earnings, U.S. Crude Oil Inventories, FOMC Member Jefferson Speaks

The EUR/USD pair climbed on Tuesday, recouping most of its earlier weekly losses as the US dollar softened broadly across markets.

Market reaction to the latest US Consumer Price Index (CPI) data was muted, with investors maintaining a cautiously optimistic outlook amid ongoing trade negotiations led by the Trump administration. However, market confidence remains tempered by the temporary nature of tariff concessions, which continue to cast uncertainty over long-term trade policy.

April's CPI report showed a modest decline, with headline inflation slipping to a new three-year low on an annualized basis.

Looking ahead to the European session on Wednesday, Germany will release final readings of the Harmonized Index of Consumer Prices (HICP), though these are not expected to significantly impact markets. On Thursday, attention will turn to Eurozone GDP data for Q1, with forecasts pointing to little change from the previous quarter.

In the US, Producer Price Index (PPI) inflation figures are scheduled for release on Thursday, followed by the University of Michigan’s Consumer Sentiment Survey on Friday. These reports will provide further insight into inflationary pressures and consumer confidence in the wake of evolving trade dynamics.

Gold prices edged higher on Tuesday, regaining some ground after Monday’s sharp decline. However, upside momentum remains limited, amid easing US inflation data and lingering optimism over a US-China trade truce.

April’s US Consumer Price Index (CPI) report showed softer-than-expected monthly inflation, while annual figures met market expectations. The data suggests that the impact of recently imposed tariffs has yet to materialize in official inflation readings.

Despite soft inflation, the outlook for US monetary policy remains cautious. Fed fund futures for December 2025 continue to price in around 52 basis points of easing, implying two rate cuts — in line with projections made by Federal Reserve officials at last December’s meeting and reaffirmed in the March Summary of Economic Projections.

Looking ahead, traders are closely monitoring key US economic data releases later this week, including the Producer Price Index (PPI) and retail sales figures, both of which could influence expectations for future Fed policy moves and broader market sentiment.

Crude oil futures posted solid gains on Tuesday, buoyed by a temporary rollback of U.S.-China tariffs and a softer U.S. inflation report that improved market sentiment.

The gains build on Monday’s rally, which saw both benchmarks climb over 4% following news that the U.S. and China agreed to significantly reduce import tariffs for a 90-day period. The development spurred optimism across global markets, lifting equities and boosting the U.S. dollar.

For the Federal Reserve, the soft inflation reading offers some breathing room. With rates on hold since the December cut, the Fed has remained cautious amid ongoing concerns that tariff policies could reignite inflationary pressures.

However, rising crude output from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) may act as a cap on further price increases. The group plans to increase exports in May and June, with output in May alone expected to rise by 411,000 barrels per day.

U.S. crude oil inventories increased by 4.3 million barrels for the week ending May 9, surprising markets that had expected a drawdown of 2.4 million barrels. The latest build contrasts sharply with the previous week’s 4.5 million barrel decline reported by the American Petroleum Institute (API), adding to volatility in oil markets. Market participants now await the official inventory data from the U.S. Energy Information Administration (EIA), scheduled for release on Wednesday, for confirmation and further market direction.

U.S. equities closed mostly higher on Tuesday, buoyed by signs of easing inflation and optimism following the recently announced U.S.-China trade agreement. The US 500 gained 0.87%, while the tech-heavy US Tech 100 jumped 1.84%.

Investor sentiment improved after fresh data showed inflation cooled more than expected in April. Core CPI, which excludes volatile food and energy prices, rose 0.2% month-over-month and 2.8% annually—both lower than consensus estimates. The data comes just days after the U.S. and China reached a temporary trade truce that included mutual tariff reductions, helping further ease inflationary concerns.

In corporate news, Boeing shares edged higher after Bloomberg reported that China had lifted a ban on deliveries of Boeing aircraft to domestic airlines—a move seen as a sign of improving U.S.-China relations. Chinese authorities reportedly instructed carriers and government agencies to resume acceptance of U.S.-made planes.

NVIDIA surged almost 6% after securing a major AI chip deal with Saudi Arabian firm Humain, which purchased 18,000 chips to power a planned 500-megawatt data center.