Market Drivers; US Session, May 15

Risk appetite saw significant upward momentum due to the prevailing bearish sentiment toward the US Dollar following the release of US inflation data measured by the CPI for April. The USD Index (DXY) had a challenging session, declining further and revisiting the area near the key 200-day Simple Moving Average (SMA) around 104.30 on Wednesday.

On May 16, the focus shifts to the US housing sector, with the release of monthly Building Permits and Housing Starts, alongside the usual Initial Jobless Claims, Philly Fed Manufacturing Index, and Industrial Production. Additionally, Federal Reserve officials Barr, Harker, Mester, and Bostic are scheduled to speak.

EUR/USD continued its upward trend for the third consecutive session, approaching the 1.0900 level, driven by ongoing USD selling. On the same day, the European Central Bank (ECB) will release its Financial Stability Review. GBP/USD extended its rally, coming close to the 1.2700 level. The Bank of England (BoE) will publish its Financial Stability Report on May 16.

USD/JPY interrupted its multi-day uptrend, declining to multi-session lows below 155.00. This decline was influenced by Dollar weakness and falling yields. On the economic calendar for May 16, we expect the advanced Q1 GDP Growth Rate, final Industrial Production figures, and weekly Foreign Bond Investment data.

In the risk-linked assets space, AUD/USD surged to levels just below the 0.6700 barrier ahead of key Australian data. On the same day, Australia will release its labor market report, and RBA’s Hunter is scheduled to give a speech.

Despite a discouraging report from the International Energy Agency (IEA), WTI prices maintained an upward trajectory due to a larger-than-expected drop in US crude oil supplies and the Greenback’s sharp pullback.

Gold prices rallied, eying the $2,400 per troy ounce mark, driven by expectations of Fed interest rate cuts, a weaker Dollar, and lower US yields. The US financial markets experienced a dynamic session on May 15, 2023, with several key developments impacting various asset classes.

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