Financial markets opened Wednesday amid continued volatility as investors awaited fresh catalysts. The U.S. Labor Department is set to release May’s Consumer Price Index (CPI) data later today, while the Treasury will conduct a 10-year bond auction.
The U.S. dollar showed mixed performance against major currencies this week, with its strongest gains recorded against the British pound. On Tuesday, the dollar held steady, with the dollar index closing slightly higher.
Following two days of negotiations, the U.S. and China agreed to ease export restrictions on rare earth elements and reached a framework to maintain the current tariff truce. This positive development supported modest gains on Wall Street. However, Bloomberg reported that a federal appeals court ruled President Donald Trump’s broad tariff measures can remain in effect during the appeals process.
Early Wednesday trading saw the dollar index hold above 99.00, while U.S. stock futures dipped about 0.2%.
Inflation expectations remain a focus: the annual U.S. inflation rate, as measured by the CPI, is projected to rise from 2.3% in April to 2.5% in May, with core CPI forecasted to increase to 2.9%.
Currency movements included the euro-dollar pair (EUR/USD) ending Tuesday near 1.1400 and trading sideways in early European hours. The British pound (GBP/USD) declined following disappointing labor market data and extended losses Wednesday morning, breaking below 1.3500. The UK’s Office for National Statistics will release April’s industrial production, manufacturing output, and GDP data on Thursday.
Meanwhile, the dollar-yen pair (USD/JPY) rebounded slightly Tuesday after Monday’s dip, trading just above 145.00 Wednesday. Japan’s May producer price index rose 3.2% year-over-year, down from 4.1% in April and below expectations of 3.5%.
Gold prices, which stagnated earlier this week, advanced during Wednesday’s European session, trading near $3,340 amid positive market sentiment.
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