This is what you need to know to trade today Wednesday May 18:
The dollar seems to have stopped its fall early Wednesday amid rising US Treasury yields. The DXY dollar index, which closed the previous three days in negative territory and lost more than 1% during that period, is moving sideways above 103.00. The 10-year US Treasury bond yield is trading sideways near 3%, after rising 4% on Tuesday. Eurostat will publish (final) inflation data for April. Later in the day, the Canadian CPI Consumer Price Index and US Home Starts will headline today’s calendar.
Risk-friendly market sentiment made it difficult for the dollar to find demand on Tuesday. The S&P 500 index gained more than 2%, as US data revealed that retail sales rose 0.9% in April, against the market expectation of 0.7%. Also, investors welcomed the news that the city of Shanghai did not record new coronavirus cases in all districts.
Earlier today, and citing three sources familiar with the matter, Reuters reported that the authorities of the city of Shanghai issued a new white list with 864 financial institutions authorized to resume their activity. However, US stock index futures are trading flat at the start of the European session. In his speech at an event organized by the Wall Street Journal, the chairman of the FOMC, Jerome Powell reiterated that they will not hesitate if they see the need to move interest rates beyond neutral adding that there was broad support among policymakers for raising rates by 50 basis points at the next two meetings.
The EUR/USD gained more than 100 pips on Tuesday before entering a consolidation phase early on Wednesday. The head of monetary policy at the European Central Bank (ECB), Klaas Knot, has stated that a rate hike of 50 basis points should not be ruled out if data in the coming months suggests that inflation is widening and accumulating, which is a boost for the euro.
The GBP/USD remains relatively calm below 1.2500 early on Wednesday, following this week’s decisive bounce. Data released by the UK Office for National Statistics revealed earlier in the session that UK inflation, as measured by the consumer price index IPC, jumped to 9% annual in April. Core CPI, which excludes volatile food and energy prices, rose to 6.2% from 5.7% in March, as expected.
The Prayed continued its bounce and topped $1,830 on Tuesday, but reversed direction as rising US Treasury yields prevented the yellow metal from finding further demand. The XAU/USD is trading in negative territory near $1,810 in the European morning.
The USD/JPY trades sideways above 129.00 for the third day in a row on Wednesday. The pair managed to hold up despite broad dollar weakness as the Japanese yen struggled to attract investors on positive risk sentiment in the market.
The Bitcoin posted modest daily gains on Tuesday but failed to muster upside momentum. At time of writing, BTC/USD is down almost 2% on the day to $29,900. The ethereum down 2.5% on the day and trading near $2,000 after Tuesday’s rally attempt.
Source: Fx Street
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