Dollar Falls on Soft Data, Inflation Figures Eyed

USD

The dollar index which measures the greenback against a basket of major currencies dropped to a one-week low of 97.24 on soft economic data. The April Core Producer Price Index rose by only 0.1% missing estimates of 0.2%. The Federal Reserve declared in the latest monetary policy meeting that inflation cooled down. However, Fed officials believe that the current drop is transient. Market participants await the release of the April Consumer Price Index later today to grasp further hints on inflation. A strong reading could spark the demand for the dollar as it would raise the chances for further monetary policy tightening in the future. On the other hand, officially the United States raised tariffs on $200 billion worth of Chinese goods to 25% from 10% prior and investors are waiting for China's response. China and the United States will continue trade negotiations later today trying to reach a deal to avoid a full-blown trade war. The US 10-year yields rose to 2.469%, the USDJPY traded at a low of 109.62, and the EURUSD rose to a high of $1.1234.

Metals

Gold prices rose slightly towards a high of $1288 as the dollar weakened and investors were seen looking for safety. On the other hand, the silver ounce tumbled to a low of $14.67, while palladium bounced off a four-month low of $1268 to trade higher near $1328.

Oil

Oil prices remain stuck in a tight trading range awaiting fresh fundamental developments. Market participants are focusing on the trade talks between China and the United States as a trade deal between the world's largest economies could spark the risk sentiment and boost oil prices. The West Texas Intermediate crude futures hovered above $62 per barrel, while Brent futures traded slightly below $71 per barrel.

Major Economic Events

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