ighed down by weaker-than-expected inflation figures—specifically the Producer Price Index (PPI)—and mixed signals from broader economic data. At the same time, markets remain skeptical about the sustainability of the recently announced trade agreement between the United States and China.
Key Developments for Friday, May 16:
Sellers reasserted control in currency markets, sending the U.S. Dollar Index (DXY) lower and reinforcing the weekly bearish trend. U.S. Treasury yields also declined across the curve. A string of key U.S. economic indicators are due today, including building permits, housing starts, import and export prices, the preliminary reading of the University of Michigan’s Consumer Sentiment Index, and net long-term capital flows. In addition, Federal Reserve official Thomas Barkin is scheduled to speak.
The euro traded mostly flat against the dollar on Thursday, with EUR/USD closing near 1.1180—little changed from the previous session. After failing to maintain earlier bullish momentum that pushed the pair to the 1.1243 area, attention now turns to final Eurozone inflation data, set to be released on May 19.
The British pound strengthened sharply, driven by supportive U.K. fundamentals and broad-based U.S. dollar weakness. GBP/USD climbed back above the 1.3300 threshold. Markets are now focused on the U.K.’s upcoming inflation report, due on May 21, as the next major driver for the currency.
The Japanese yen extended its gains for a third consecutive day, with USD/JPY retreating toward a weekly low around 145.50. Japanese first-quarter GDP and industrial production data are expected soon, while Bank of Japan Governor Tetsuya Nakamura is also scheduled to deliver remarks.
The Australian dollar remained under pressure, with AUD/USD slipping further to hover near the 0.6400 level. This level appears to be offering some resistance as investors await fresh signals from the Reserve Bank of Australia’s policy meeting scheduled for May 20.
In the commodities market, WTI crude oil prices dropped and approached the key $60.00 per barrel level. Market sentiment was dampened by speculation that progress may be underway in U.S.-Iran nuclear negotiations, which could lead to an easing of oil supply constraints.
Meanwhile, gold prices rebounded, breaking above $3,200 per ounce, as a weaker U.S. dollar and rising expectations of a potential Federal Reserve policy shift later this year supported demand for the metal. Silver prices also recovered, bouncing from near $31.60 to around $32.50 per ounce.
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