Although not very aggressive, the US dollar returned to show its strengthening pattern in the New York session yesterday after the market focused on the US inflation data report.
The US annual consumer price index (CPI) reading for April was published at 8.3% above expectations of 8.1%. Although slightly lower than the March reading, inflation is still hovering at a 40 -year high.
This is seen to have injected some of the momentum the US dollar has lost since the beginning of the week after the focus on the FOMC meeting and the US NFP jobs report last week.
This will also be an indicator of confidence for investors in anticipation of continued policy tightening measures by the Federal Reserve (Fed) after seeing an interest rate hike by 50 basis points at last week’s meeting.
The stock market is now beginning to show a recovery to rebound in the green territory while US government bond yields show a decline below the 3.0% level again.
The US dollar index is still struggling to maintain momentum after 2 days of rising to around a 20 -year high.
Analysts expect the resumption of the US dollar to continue in next week's trading will put pressure on other major currencies in the market.
The Euro currency has a chance to rebound with indicators of the European central bank (ECB) to start following in the footsteps of other major central banks that have moved into a phase of policy tightening.
ECB President Christine Lagarde signaled the central bank would raise interest rates as early as July following the rise in inflation.
While the Pound continued to fall lower against the US dollar, hitting its latest low since May 2020.
Adding pressure to the Pound, the European Union (EU) has announced to suspend post-Brexit trade talks with the UK if the UK acts to cancel the Northern Ireland protocol.
Developments in commodity markets, the European Commission is still continuing discussions for measures to restrict Russian oil imports. Being a major issue is Hungary’s dependence on Russian oil supplies.
Gold trading traded slightly higher on Wednesday after the yellow metal devalued to its latest 3 -month low this week.
While the crypto market is currently in a bearish phase which is triggering investor panic in the market with the value of Bitcoin hovering below the $ 30,000 level.
