Forex Today: US Dollar struggles to find demand as focus shifts to inflation report
Here is what you need to know on Wednesday, May 15:
The US Dollar (USD) is finding it difficult to stay resilient against its major rivals in the European morning on Wednesday. Eurostat will publish the preliminary Gross Domestic Product (GDP) data for the first quarter. Later in the day, the Consumer Price Index and Retail Sales data for April will be featured in the US economic docket alongside the NY Empire State Manufacturing Index.
US CPI set to grow at slower pace in April amid mounting concerns about inflation pickup.
The US Bureau of Labor Statistics reported on Tuesday that the Producer Price Index (PPI) rose 2.2% on a yearly basis in April. This reading followed the 1.8% increase recorded in March and came in line with the market expectation. Although the initial market reaction helped the USD gather strength, the improving risk mood caused the currency to lose its traction later in the American session. The USD Index closed the second consecutive day in negative territory on Tuesday and was last seen fluctuating below 105.00. Meanwhile, US stock index futures trade mixed early Wednesday after Wall Street's main indexes gained between 0.3% and 0.7% on Tuesday. Finally, the benchmark 10-year US Treasury bond yield edges lower toward 4.4%.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.50% | -0.51% | 0.39% | -0.21% | -0.58% | -0.57% | -0.04% | |
| EUR | 0.50% | -0.06% | 0.90% | 0.29% | -0.13% | -0.09% | 0.43% | |
| GBP | 0.51% | 0.06% | 0.89% | 0.33% | -0.05% | -0.03% | 0.49% | |
| JPY | -0.39% | -0.90% | -0.89% | -0.64% | -0.94% | -1.02% | -0.42% | |
| CAD | 0.21% | -0.29% | -0.33% | 0.64% | -0.34% | -0.37% | 0.08% | |
| AUD | 0.58% | 0.13% | 0.05% | 0.94% | 0.34% | -0.08% | 0.54% | |
| NZD | 0.57% | 0.09% | 0.03% | 1.02% | 0.37% | 0.08% | 0.52% | |
| CHF | 0.04% | -0.43% | -0.49% | 0.42% | -0.08% | -0.54% | -0.52% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
EUR/USD benefited from the selling pressure surrounding the USD and gained 0.3% on Tuesday. The pair continues to stretch higher early Wednesday and was last seen trading at its highest level since early April above 1.0820.
After falling toward 1.2500 in the early American session on Tuesday, GBP/USD reversed its direction and advanced toward 1.2600 later in the day. The pair holds steady slightly below this level in the European morning.
The data from Australia showed in the Asian session that the Wage Price Index rose 0.8% on a quarterly basis in the first quarter. Although this print came in slightly below the market expectation of 0.9%, it failed to trigger a noticeable in AUD/USD. At the time of press, the pair was up 0.2% on the day at 0.6640. Early Thursday, the Australian Bureau of Statistics will release labor market data for April.
Australian Dollar gains ground ahead of US CPI.
USD/JPY continued to edge higher but erased a portion of its daily gains in the second half of the day on Tuesday. Early Wednesday, the pair holds steady slightly below 156.50.
Gold took advantage from the pullback seen in the US T-bond yields on Tuesday and retraced Monday's decline. XAU/USD stays in a consolidation phase above $2,350 early Wednesday.
Gold price trades with modest gains, investors await US CPI and Retail Sales data.
(This story was corrected at 07:16 GMT to say that the Producer Price Index data for April matched the market expectation, rather than coming in above it.)
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Wed May 15, 2024 12:30
Frequency: Monthly
Consensus: 3.4%
Previous: 3.5%
Source: US Bureau of Labor Statistics
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
