Here is what you need to know on Friday, May 12:
Markets stay relatively quiet on Friday as investors assess the latest data releases while keeping an eye on headlines surrounding the banking crisis in the US. Later in the day, Import and Export Price Index data will be featured in the US economic docket. Ahead of the weekend, the University of Michigan (UoM) will release the Consumer Sentiment Survey for May.
Michigan Consumer Sentiment Index Preview: Modest improvement not enough to boost the mood
Escalating fears over a deepening banking crisis caused investors to seek refuge on Thursday and the US Dollar Index climbed to its highest level in 10 days above 102.00 before going into a consolidation phase near that level early Friday. PacWest said in a securities filing on Thursday that its deposits dropped nearly 10% and the bank's shares lost more than 20%. The financial heavy Dow Jones Industrial Average lost nearly 0.7% on a daily basis. In the European morning, US stock index futures trade modestly higher on the day.
The Bank of England (BoE) raised its policy rate by 25 basis points to 4.5% as expected and repeated in its policy statement, "If there were to be evidence of more persistent pressures, then further tightening of monetary policy would be required." Although the BoE revised inflation projections higher, Governor Andrew Bailey said there were good reasons to think that the Consumer price Index will fall sharply from April.
GBP/USD came under heavy bearish pressure after the BoE event on Thursday and lost more than 100 pips on the day. Early Friday, the data from the UK revealed that the Gross Domestic Product contracted by 0.3% on a monthly basis in March. In the same period, Industrial Production and Manufacturing Production both expanded by 0.7%. GBP/USD, however, largely ignored these data and was last seen posting small recovery gains above 1.2500.
EUR/USD fell to its weakest level in a month at 1.0900 on Thursday. In the European morning, the pair stages a technical correction but continues to trade below 1.0950. European Central Bank (ECB) Vice President Luis de Guindos will be delivering a speech later in the day.
Although USD/JPY edged higher amid broad-based USD strength on Thursday, the risk-averse market atmosphere didn't allow the pair to gather bullish momentum. Early Friday, the pair trades modestly higher on the day above 134.50.
Gold price failed to benefit from retreating US Treasury bond yields on Thursday and closed in negative territory below $2,020. XAU/USD stays on the back foot in the European session and trades at around $2,010.
Following a two-day consolidation, Bitcoin came under renewed selling pressure on Thursday and continued to stretch lower early Friday. BTC/USD was last seen trading at its weakest level in nearly two months below $26,300. Ethereum lost mode than 2% on Thursday and closed below $1,800. Sellers retain control in the European session and ETH/USD trades in the red at around $1,750.
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Despite losing some upside momentium, EUR/USD keeps the firm tone around the mid-1.1300s on Thursday, buoyed by renewed US Dollar weakness as investors grappled with the continued stalemate in US–China trade negotiations.
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GBP/USD hovers around the 1.3300 area on Thursday, supported by a broad rebound in risk-sensitive assets, renewed weakness in the Greenback and lingering uncertainty over US–China trade talks.
Gold sticks to the bullish stance near $3,330
On Thursday, gold regained lost ground after two consecutive days of declines, with XAU/USD climbing back toward $3,300 per troy ounce following an earlier rally to roughly $3,370. The metal drew safe-haven buying as renewed fears of a US–China trade flare-up weighed on broader markets.
Bitcoin Price corrects as increased profit-taking offsets positive market sentiment
Bitcoin (BTC) is facing a slight correction, trading around $92,000 at the time of writing on Thursday after rallying 8.55% so far this week. Institutional demand remained strong as US spot Exchange Traded Funds (ETFs) recorded an inflow of $916.91 million on Wednesday.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
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