The US Dollar recovered some losses on Thursday after several days of decline. Investors welcomed stronger-than-expected US business activity numbers and the progress of President Trump’s tax reform bill, which passed the House of Representatives.
On Friday, market attention will turn to US New Home Sales data and a speech from Federal Reserve official Cook. The US Dollar Index moved closer to the key 100.00 level after three consecutive days of decline.
The euro weakened against the dollar, falling below the 1.1300 support level. Germany’s final Q1 GDP growth rate and the European Central Bank’s wage growth report will be important releases. ECB officials Lane and Schnable are also scheduled to speak.
The British pound stayed above 1.3400 despite mixed UK business activity data for May. Upcoming reports include GfK’s Consumer Confidence and retail sales figures.
After seven straight days of decline, USD/JPY bounced slightly above 144.00. Japan’s inflation data, expected at the end of the week, will be closely watched.
The Australian dollar faced renewed selling pressure, trading near the 0.6400 level. Investors await the Reserve Bank of Australia’s monthly Consumer Price Index report due on May 28.
Oil prices continued to fall, with WTI crude nearing $60 per barrel amid speculation that OPEC+ may increase output.
Gold prices slipped from multi-day highs near $3,350 per troy ounce, pressured by a stronger US dollar. Silver also dropped from seven-week peaks near $33.70 per ounce to below $33.00.
Japan’s core consumer inflation rose 3.5% in April, the fastest increase in over two years. This exceeded expectations of 3.4% and followed a 3.2% rise in March. Core inflation excludes fresh food prices but includes oil products.
This rising inflation puts pressure on the Bank of Japan (BOJ) to consider further interest rate hikes. The BOJ ended its decade-long stimulus program and raised short-term rates to 0.5% in January 2025. However, economic challenges, including US tariffs, make the timing of future hikes uncertain.
Another inflation measure, excluding both fuel and fresh food prices, rose 3.0% year-on-year in April, up from 2.9% in March. This gauge is seen as a better indicator of demand-driven inflation by the BOJ.
Energy prices, especially electricity and gas, remain high but have eased slightly recently. Food prices continue to rise, driven by poor rice harvests and increased demand from tourism and panic buying after a megaquake warning.
Japan’s overall inflation rate was 3.6% in April, unchanged from March, and has stayed above the BOJ’s 2% target for over three years. This sustained inflation challenges the BOJ’s loose monetary policy and could lead to cautious rate hikes.
In conclusion, Japan’s inflation data highlight growing price pressures that may push the BOJ toward tighter monetary policy. Meanwhile, global markets watch US economic data and geopolitical events that affect currencies and commodities.
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