What to watch for on Thursday, May 19:
The USD rose against its high yield rivals, but fell against safe-haven currencies, reflecting the poor market sentiment.
Inflation was the main catalyst for the latest episode of risk aversion. The EU Consumer Price Index was confirmed at 7.4% yoy in April, while the UK CPI rose 9% in the year to April. Lastly, the Canadian benchmark reached 6.8%. Overheating prices are a drag on economic growth, already undermined by supply chain problems and the Eastern European crisis.
Two US institutes, Wells Fargo and S&P, revised down their growth forecasts, but expect inflation to remain high. Wall Street resumed its slide, with all three major indices sinking in the red. The DJIA is poised to close more than 1,100 points lower, while the S&P 500 and Nasdaq Composite are down more than 4% each.
Yields on 10-year US Treasuries are hovering below 2.90% as investors have rushed into the safety of the bonds.
The EUR/USD pair is trading around 1.0460, while the GBP/USD is trading at 1.2340. The AUD/USD pair fell to 0.6960, while the USD/CAD recovered the threshold of 1.2800. On the other hand, USD/CHF fell to 0.9880 while USD/JPY is trading at the 128.20 zone.
XAUUSD failed to attract speculative interest and is now hovering around $1,816 a troy ounce. Oil prices fell, with WTI now trading at $106.90 a barrel.
Source: Fx Street
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