US Dollar Falls as Inflation Pressures Ease

US Equities

US stocks rose slightly on Friday to end the week on Strong gains. Major US Indices gained more than two percent and Dow Jones was able to post its longest winning streak since late November. US equities were supported by strong earnings and the slowdown in the recent consumer and producer prices. The weaker-than-expected inflation numbers helped ease the concerns that the Fed will hike interest rates rapidly.

USD

US dollar fell more than one percent from its 2018 highs as investors inflation expectations eased. The dollar index rose to four-month highs earlier last week as rising US bonds yields highlighted the gap in the interest rates between the United States and its rivals. However, a soft Consumer Price index on Thursday and Import Price Index on Friday reduced the inflationary pressures and lowered the probability that the Fed will raise rates three more times this year.

CAD

The Canadian dollar is trading around a three-week high against the US dollar as we approach the deadline for NAFTA talks. The White House Speaker Paul Ryan set May 17^th as the deadline for an agreement to be reached. The monthly Job report was released on Friday, a weaker-than-expected employment change pressured the CAD to lose some of its gains, but the Unemployment rate stood at 40 year-low.  In terms of data, Consumer Price Index is due on Friday.

Gold

Gold prices retreated from a two-week high on Friday as investors seek risky assets. Gold was being supported by the rising Geopolitical tensions but capped by the rising Treasury yields. However, soft inflation numbers lowered the treasury yields and Trump pulling out from the nuclear deal elevated the geopolitical worries. The United States threatened on Sunday to impose sanctions on European companies that continue to do business with Iran. In terms of technical analysis, gold is ranging between the 100 and 200-day moving average.

Oil

Oil prices dropped on Friday on expectations that the European Countries will maintain the deal with Iran which will keep the country’s exports to global markets. Moreover, the US oil production continues to rise. The Baker Hughes rig count showed that US drillers added ten rigs last week, to reach a total of 844 rigs which is the highest since 2015. The OPEC monthly report is due today.

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Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.