This is what you need to know to operate on Wednesday, May 21:
The sterling pound (GBP) is strengthened in front of its rivals early on Wednesday after the publication of the April Kingdom inflation data, while the US dollar (USD) continues to weaken due to commercial uncertainty and political problems. The economic agenda will not have high -level data publications in the middle of the week, which will allow investors to focus on geopolitics and the comments of the central bankers.
US dollar price this week
The lower table shows the percentage of the US dollar change (USD) compared to the main currencies this week. American dollar was the weakest currency against the Swiss Franco.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.36% | -1.27% | -1.22% | -0.64% | -0.80% | -1.14% | -1.78% | |
| EUR | 1.36% | 0.07% | 0.20% | 0.79% | 0.70% | 0.29% | -0.41% | |
| GBP | 1.27% | -0.07% | -0.17% | 0.71% | 0.62% | 0.21% | -0.49% | |
| JPY | 1.22% | -0.20% | 0.17% | 0.59% | 0.59% | 0.28% | -0.51% | |
| CAD | 0.64% | -0.79% | -0.71% | -0.59% | -0.14% | -0.50% | -1.20% | |
| Aud | 0.80% | -0.70% | -0.62% | -0.59% | 0.14% | -0.41% | -1.09% | |
| NZD | 1.14% | -0.29% | -0.21% | -0.28% | 0.50% | 0.41% | -0.70% | |
| CHF | 1.78% | 0.41% | 0.49% | 0.51% | 1.20% | 1.09% | 0.70% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the US dollar of the left column and move along the horizontal line to the Japanese yen, the percentage change shown in the box will represent the USD (base)/JPY (quotation).
The National Statistics Office (ONS) of the United Kingdom reported in the European morning that annual inflation in the United Kingdom, measured by the variation of the consumer price index, rose to 3.5% in April from 2.6% in March. This figure exceeded the expectation of the market of 3.3%. In monthly terms, the CPI increased 1.2% after an increase of 0.3% before. Finally, the underlying IPC, which excludes volatile food and energy prices, increased 3.8% in annual terms, exceeding the estimation of analysts of 3.6%. GBP/USD He acquired bullish impulse after high inflation data from the United Kingdom and advanced to its highest level since February 2022, above 1,3450.
China’s Ministry of Commerce said in Wednesday that US measures on China’s advanced chips are “typical of unilateral harassment and protectionism”, adding that US violates international law by abusing export controls to contain and suppress China. Meanwhile, the Republicans of the House of Representatives are struggling to approve the fiscal bill of President Donald Trump, which could add approximately 3.8 billion dollars to the national debt, according to an analysis published on Tuesday by the Congress Budget Office (CBO). He USD index It is kept under bearish pressure on Wednesday and trades about 99.50, losing around 0.5% in the day, while the future stock markets of the US falls between 0.4% and 0.6% after the main Wall Street indices closed in negative territory on Tuesday.
EUR/USD He relies on his weekly profits and goes up to 1,1350 in the early hours of the European session. The European Central Bank (ECB) will publish its financial stability report later in the day.
Japan’s data showed in the first Asian session that exports increased by 2% in annual terms in April, as expected. In the same period, imports decreased by 2.2%. USD/JPY It remains down on Wednesday and descends around 143.50.
Gold It benefited from the atmosphere of risk aversion in the market and won almost 2% on Tuesday. The Xau/USD preserves its bullish impulse and quotes comfortably above $ 3,300, rising around 1% in the day.
USD/CAD Continue to go down and quote below 1,3900 after closing the first two days of the week in red. The Canada Statistics Office reported Tuesday that the annual IPC inflation was softened to 1.7% in April from 2.3% in March.
FAQS inflation
Inflation measures the rise in prices of a representative basket of goods and services. General inflation is often expressed as an intermennsual and interannual percentage variation. The underlying inflation excludes more volatile elements, such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. The underlying inflation is the figure on which economists focus and is the objective level of central banks, which have the mandate of maintaining inflation at a manageable level, usually around 2%.
The consumer price index (CPI) measures the variation in the prices of a basket of goods and services over a period of time. It is usually expressed as an intermennsual and interannual variation. The underlying IPC is the objective of the central banks, since it excludes the volatility of food and fuels. When the underlying IPC exceeds 2%, interest rates usually rise, and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually translates into a stronger currency. The opposite occurs when inflation falls.
Although it may seem contrary to intuition, high inflation in a country highlights the value of its currency and vice versa in the case of lower inflation. This is because the Central Bank will normally raise interest rates to combat the greatest inflation, which attracts more world capital tickets of investors looking for a lucrative place to park their money.
Formerly, gold was the asset that investors resorted to high inflation because it preserved their value, and although investors often continue to buy gold due to their refuge properties in times of extreme agitation in the markets, this is not the case most of the time. This is because when inflation is high, central banks upload interest rates to combat it. Higher interest rates are negative for gold because they increase the opportunity cost to keep gold in front of an asset that earns interest or place money in a cash deposit account. On the contrary, lower inflation tends to be positive for gold, since it reduces interest rates, making bright metal a more viable investment alternative.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
