Forex Today: Dollar runs on tightening speculation

FXStreet Team FXStreet

What you need to know on Thursday, May 13:

The American currency rallied to fresh weekly highs against most major rivals, after the US reporter higher-than-expected April inflation. Stocks edged firmly lower while US Treasury yields rose to their highest in one month, as CPI figures suggest that the Fed is wrong about its view on inflation rising temporarily. Speculative interest rushed to price-in sooner than anticipated monetary policy tightening.

The EUR/USD pair fell to 1.2065, while GBP/USD was down to 1.4055, both ending the day near such lows. Market players ignored encouraging UK data, as the country reported generally better-than-anticipated figures. The Q1 Gross Domestic Product came in at -1.5%, while the March monthly GDP printed at 2.1%. In the same month, Industrial Production rose by 3.6% YoY, while Manufacturing Production was up by 4.8% YoY. The positive headlines were no surprise amid the impressive immunization campaign in the country leading to economic reopenings.

The Australian dollar was also sharply down against the greenback, while USD/CAD held within familiar levels as oil prices continued to advance. USD/JPY trades near its May high at 109.69.

Gold seesawed between gains and losses, ending the day in the red at $ 1,820 a troy ounce. Crude oil prices eased ahead of the close, although WTI settled at $ 65.80 a barrel.

The focus now shifts to US Retail Sales, to be out next Friday. Better than expected figures could give yet another boost to the greenback and put it in a bullish path.

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EUR/USD holds lower ground near 1.1850 ahead of EU/ US data

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1850 in European trading on Friday. A broadly cautious market environment paired with modest US Dollar demand undermines the pair ahead of the Eurozone GDP second estimate and the critical US CPI data.

GBP/USD keeps losses around 1.3600, awaits US CPI for fresh impetus

GBP/USD holds moderate losses at around 1.3600 in the European session on Friday, though it lacks bearish conviction. The US Dollar remains supported amid softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold trims intraday gains to $5,000 as US inflation data loom

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains heading into the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

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