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14/06/2024 - 08:13 UTCThe U.S. dollar recovered quickly against other major currencies on Thursday, with the dollar index (USDX) taking back 0.49% of its value after suffering its biggest drop in a month The greenback and continues to move higher into positive territory hitting 105.5 early on Friday despite a soft U.S. producer price inflation report for May, as investors assess recent hawkish comments from the Federal Reserve at the conclusion of its meeting on Wednesday. According to comments by Fed chairman Powell only one rate cut is on the table for this year while more data is needed for additional rate cuts to be justified.
According to widely cited CME Fedwatch tool, bets that the Fed will initiate its rate cut cycle in September rose to 59.8% while odds for a November rate cut currently stand at 48.7%.
In other news, equity markets in China suffered losses on Thursday, with part of the move attributed to the EU unveiling steep tariffs of between 17% to 30% on the import of Chinese electric vehicles. In Japan however, stock markets are on the rise, as the Bank of Japan surprised investors by not enacting near-term changes to its bond buying program while interest rates were kept steady.
A rally in the technology sector driven by AI developments as well as news of cooling inflation appear to be still at play, maintaining the support on the key U.S. equity indices, however, broader sectors were subdued even as factory inflation data unexpectedly shrank in May. In corporate news, Meme-stock guru Roaring Kitty, also known as Keith Gill, informed his followers about his GameStop position Thursday afternoon, indicating that his stake on the company grew to 9 million shares after selling his big options position
On Friday, some price action could be observed upon the release of US import prices and a survey by the University of Michigan regarding consumer sentiment and inflation expectations. Later on the focus could turn to a speech by ECB President Christine Lagarde at the 30th Dubrovnik Economic Conference
EUR/USD tumbled back into recent lows on Thursday ending the session 0.80% lower, paring away recent gains as confidence in the Euro (EUR) flounders on the back of EU political instability. A miss in US Producer Price Index (PPI) figures is steepening concerns of an economic slowdown in the US, sparking a hard curve in risk appetite heading into the week’s final trading sessions.
European parliamentary elections drove confidence in the Euro even lower as France dissolves parliament and heads into snap elections. Market participants see the prospect of France’s President Macron getting replaced by the National Rally’s Marine Le Pen, a right-leaning conservative politician sweeping to popularity within France on a platform of steep tax cuts, lowering the retirement age, and stiff limits to immigration into France from both outside and within the EU.
US PPI figures eased quicker than forecasts, and US Initial Jobless Claims flagged a faster-than-expected uptick in new unemployment claims.
Gold prices retreated on Thursday ending the session 0.79% lower. The Federal Reserve (Fed) projects just one interest rate cut instead of the three proposed since December’s 2023. In the meantime, mixed US economic data boosted the Greenback to the detriment of the golden metal.
News that the People’s Bank of China paused its 18-month bullion buying spree weighed on the precious metal. PBOC holdings held steady at 72.80 million troy ounces of Gold in May.
Oil prices settled lower Thursday, as concerns over supply outstripping demand persist a day after a surprise build in U.S. crude inventories, but losses were kept in check by signs of cooling U.S. inflation.
Crude prices came out on top despite mixed signals on U.S. interest rates, after the Federal Reserve said it saw much fewer interest rate cuts in 2024 than initially forecast. But soft inflation readings pushed up hopes that this would not remain the case.
US 500 and US Tech 100 added gains on Thursday after strength in technology shares saw Wall Street extend a recent run of record highs as data showed some cooling in inflation.
Gains in Wall Street were driven largely by optimism over artificial intelligence and came even as the Federal Reserve warned that it saw fewer chances of interest rate cuts in 2024.
Producer price index data released on Thursday showed factory prices unexpectedly fell in May, adding to optimism that a disinflationary trend was in play.
Chipmaker Broadcom Inc surged 12% on Thursday after clocking strong quarterly earnings on AI demand, while software maker Adobe Systems Incorporated also logged strong earnings and hiked its 2024 guidance on higher demand for its AI-powered editing tools.
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