Market Drivers – US Session: Markets Brace for US Inflation Data as Dollar Hits New Lows

Global financial markets are on edge as concerns over a potential US-China trade war continue to weigh heavily on investor sentiment, driving the US Dollar to fresh multi-month lows. The US Dollar Index (DXY) slumped below the critical 101.00 level, pressured by declining US yields across the board. On Friday, April 11, all eyes will be on the release of US Producer Prices, a key indicator of inflationary pressures, alongside the preliminary Michigan Consumer Sentiment data. Speeches from Federal Reserve officials are also expected to provide further clues about the central bank’s next moves, adding to the market’s focus on the US economy.

Across the Atlantic, the Euro gained significant ground, with EUR/USD surging past the pivotal 1.1200 mark to reach new highs. Investors are now awaiting Germany’s final Inflation Rate and Current Account data, which could influence the European Central Bank’s policy outlook. Meanwhile, the British Pound continued its weekly recovery, with GBP/USD inching closer to the 1.3000 threshold. The UK economic calendar is packed, featuring GDP figures, Goods Trade Balance, Industrial and Manufacturing Production, Construction Output, and the NIESR Monthly GDP Tracker, all of which will shed light on the health of the British economy.

In Asia, the Japanese Yen saw a sharp pullback, with USD/JPY revisiting recent lows near 144.00. Japan’s economic docket is relatively quiet until April 14, when Capacity Utilization and final Industrial Production figures are due. Down under, the Australian Dollar capitalized on the Greenback’s weakness, with AUD/USD climbing above 0.6200 to hit a four-day high. Looking ahead, the Reserve Bank of Australia’s meeting minutes, set for release on April 15, will be closely watched for insights into future monetary policy decisions.

Commodity markets also felt the heat of trade war fears. Crude oil prices, as measured by WTI, retreated below $59.00 per barrel, erasing much of Wednesday’s gains amid tariff-related uncertainties. In contrast, precious metals shone brightly. Gold prices soared to a record high near $3,180 per troy ounce, fueled by the Dollar’s decline, trade tensions, and falling US yields. Silver also joined the rally, climbing to a four-day peak above $31.30 per ounce and breaking through its critical 200-day simple moving average.

As markets navigate this volatile landscape, the interplay of inflation data, central bank signals, and geopolitical risks will likely dictate the next moves for currencies and commodities alike. Investors remain on high alert, with the potential for further surprises looming large.