What you should know on Thursday, May 12:
The US dollar ended the day with gains against most major rivals, although price action was spotty in the forex market. The dollar rallied after the annual US Consumer Price Index registered 8.3%, higher than the 8.1% expected. The monthly figure rose 0.3% vs. 0.2% expected. Finally, the annual core CPI came in at 6.2%, slightly below the previous 6.5%, but above the 6% expected. Investors had been hoping for confirmation that inflation had peaked, but those numbers point to a long battle ahead to tame price pressures.
Stocks plunged on the news and managed to turn green afterward, though the positive tone was short-lived. US indices closed the day with bearish numbers. US government bond yields ended the day lower amid safety demand, with the 10-year Treasury note up 2.92% at the close.
The EUR/USD pair is trading around 1.0520, weighed down by central bank imbalance. The European Central Bank has decided to catch up with the other major central banks. President Christine Lagarde hinted that the central bank could raise rates as early as July as inflation continues to rise. Furthermore, ECB Governor Madis Muller noted that the stimulus program known as APP should end in July, while an increase should not be long. Another member of the Governing Council, Francois Villeroy, added that the central bank would start to rise this summer.
GBP/USD fell to the 1.2240 price zone, its lowest level since May 2020. The pound was hit by Brexit woes as the EU announced it would suspend its post-Brexit trade deal with the UK if the The UK unilaterally revokes the Northern Ireland Protocol.
Meanwhile, the European Commission is still discussing an embargo on Russian oil imports. The main problem is Hungary’s dependence on Russian supplies.
AUD/USD is down, trading around 0.6930, while USD/CAD is around 1.3000. The Japanese yen appreciated against the dollar, with USD/JPY ending the day at 129.85.
Commodities posted modest intraday gains. Gold is trading around $1,854 a troy ounce, while WTI rallied to $105.00 a barrel.
Source: Fx Street
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