Market Drivers – US Session – Friday. June 10

The US Dollar Index, a measure of the dollar’s value, is advancing 0.84%, sitting at 104.177, while the US 10-year benchmark note rises 21 basis points and is up at 3.154%.

As investors expect an aggressive US Fed, USD/CHF rallies 0.80% post US hot inflation. Elevated US Treasury yields lifted the US dollar and weighed on stocks as Wall Street was crushed and forced to experience a difficult Friday.

US CPI increased, lifting US Treasury yields on US Fed hike expectations, and stocks fall. Reflection on US data is better illustrated by the equity markets. European bourses plunged and finished with losses, while US equities nosedived, slashing between 2.12% and 3% of their value. The US dollar rose while US Treasury yields skyrocketed, while the Treasury curve inverts.

Economic Data

US: The annual pace of inflation in the US rose to 8.6% in May according to the latest Consumer Price Index data released by the US Bureau of Labour Statistics on Friday. That was above the expected reading of 8.3%. MoM, the headline inflation rate was 1.0%, well above the expected rise to 0.7% from 0.3% back in April.

Core measures of the CPI also came in hotter than expected. YoY, core prices were up 6.0%, above the expected drop to 5.9% from 6.2% a month earlier. MoM, the rise in core prices was also higher than expected at 0.6% and unchanged versus one month ago, versus expectations for a drop to 0.5%.

Canada: Economic data released on Friday showed the jobs in Canada rose by 39,800 in May, surpassing expectations. Analysts consider that recent economic data means that the Bank of Canada could raise its interest rates a little higher.

Other Developments

Gold prices are soaring on Friday despite higher US yields and a stronger dollar. The Gold Index XAU/USD rebounded again at the $1830 but this time it broke $1850 and a few minutes later reach $1870, and even $1874 at the time of writing.

Following the US May CPI report, XAU/USD bottomed at $1824, the lowest level in three weeks as Treasury yields moved higher. After moving sideways in a wide range, gold broke above $1850 and gained more momentum.

On Friday, the USD/CHF opened around 0.9800 and dipped below the figure on the news from Japan, particularly BoJ’s and finance officials, unveiling a document threatening to intervene in the forex markets to address the yen’s weakening. The USD/CHF pair dipped towards daily’s low at 0.9766 but rallied on US data towards highs of 0.9890s.

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