Gold benefits from US Dollar’s slump to 15-month low

Downbeat prints of US inflation joined the league of softer statistics that highlights the need of pushing the Fed rate towards the peak sooner than later, which in turn fuelled market sentiment on late Wednesday and early Thursday. Adding to that were headlines about upbeat China trade numbers and the Fed’s Beige book suggesting a slight improvement in the US economic activity since late May.

With this, the US Dollar slumps to the lowest level in more than a year and the riskier assets rise. The same helps prices of Gold and crude oil to renew monthly highs while fueling the antipodeans like AUDUSD and NZDUSD. Further, EURUSD also jumped to the highest level since March 2022 whereas GBPUSD renews its 15-month top before witnessing a mixed data dump from the UK.

On the contrary, BTCUSD and ETHUSD fail to cheer the softer US Dollar and rather drop for the second consecutive day as we write amid US lawmakers’ new approach to the crypto regulation.

Following are the latest moves of the key assets:

• Brent oil remains mildly bid at the highest levels since late April, up 0.25% near $80.25 at the latest.
• Gold price renews a one-month high to $1,961, up 0.20% intraday as we write.
• USD Index drops to the lowest level since April 2022, down 0.08% near 100.50 at the latest.
• Wall Street closed with minor gains and probed the Asia-Pacific optimists while equities in Europe and UK are trading mixed by the press time.
• BTCUSD and ETHUSD print minor gains to around $30,350 and $1,870 as we write.

US inflation played its role

The much-awaited US Consumer Price Index (CPI) confirmed the market’s speculations that the inflation fears are fading off late, suggesting the lesser need for higher rates and a lighter burden on the economy, especially at the latest time when the statistics are dwindling.

With this, the hopes of China’s return to leadership and the expectations of upbeat US data in the future also allowed the risk appetite to remain slightly positive.

As a result, the US Dollar suffered heavily and allowed the Gold, Euro, JPY and NZDUSD to lead the gainers’ party whereas the Crude Oil and GBPUSD appeared a bit shy due to mixed catalysts.

Wall Street closed on the positive side and stocks in the Asia-Pacific zone also rallied but the European equities seem a bit restrictive as traders want to reconfirm the latest optimism, amid only the US Dollar’s slump and nothing major from anywhere else, except from China.

Cryptos are on the back foot despite the US Dollar’s slump as the US policymakers remain on the way to regulate the much-debated e-currencies, even with a likely softer blow.

• Strong buy: USDCAD
• Strong sell: ETHUSD, GBPUSD, Gold
• Buy: USD Index, Nasdaq, USDJPY
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

US PPI, Jobless Claims in focus

Moving on, US Producer Price Index and the weekly Jobless Claims will be important to watch for clear directions and may allow the US Dollar to lick its wounds in case of firmer outcomes. However, the sentiment is likely to remain firmer and may help the riskier currencies to end the week on a positive side, unless witnessing any drastic surprises.

May the trading luck be with you!