Market Drivers – US Session – Wednesday 11 May

Mohamed Abdelhamid 12 May, 2022 3:50 am Commodities, Forex Market, Global Stock Market, Market Update

The US dollar closed with gains against most major rival currencies, although price action was choppy across the market.

Economic Data
The US dollar rallied after the release of CPI data at 8.3%, higher than the estimates. The monthly figure was up 0.3% against the 0.2% expected. Finally, the annual core CPI hit 6.2%, slightly below the previous 6.5%, but above the 6% expected. Investors were hoping for confirmation inflation would have peaked, but such numbers hint at a long battle ahead to tame price pressures.

Other Developments
AUD/USD is down, trading at around 0.6930, while USD/CAD stands at around 1.3000. The Japanese yen appreciated against the US dollar, with USD/JPY ending the day at 129.85.

The EUR/USD pair trades around 1.0520, weighed by central banks’ imbalance. The European Central Bank has decided to catch up with the rest of major central banks. President Christine Lagarde hinted the central bank could hike rates as soon as July as inflation continues to rise.

ECB’s Governor Madis Muller noted that the stimulus program known as APP should end in July, while a hike must not be far behind. Another Governing Council Member, Francois Villeroy, added that the central bank would start hiking this summer.

GBP/USD plunged to the 1.2240 price zone, its lowest since May 2020. The Pound was hit by Brexit woes as the EU announced it would suspend its post-Brexit trade deal with the UK if the UK unilaterally revokes the Northern Ireland Protocol

Stocks plunged with the news and managed to turn green afterwards, although the positive tone was short-lived. US indexes closed the day in the red. US government bond yields ended the day down amid demand for safety, with the 10-year Treasury note yielding 2.92% at the close.

The European Commission keeps discussing an embargo on Russian oil imports. The main issue is Hungary’s dependence on Russian supplies.

Commodities posted modest intraday advances. Gold is trading at around $1,854 a troy ounce, while WTI recovered to $105.71 a barrel.

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