Today investors are anticipating with bated breath US inflation data as well as weekly jobless claims report. This macroeconomic data will have a strong impact on gold and the US dollar index. If reports turn out to be negative, the US currency will nosedive against its main rivals.
In the meantime, the US dollar is trading steadily. This morning, investors are cautious ahead of the publication of the US consumer price index. The results of the inflation report may increase the likelihood of a reduction in the Fed's bond-buying program. Analysts expect further inflation growth in May, predicting a rise in the consumer price index.
If so, the US dollar index may weaken again and reach the level of 89.700 and even drop below. Currently, it is trading at 90.20.
Yesterday, the S&P 500 index fell by 0.18%. The dollar/yen pair managed to climb by 0.12% amid a decline in the stock market. There is still a weak dependence of the yen on the dollar because traders are still awaiting crucial economic data. For this reason, currently, the pair may either advance to 110.47 or decline to 108.35.
If the price goes below the nearest level of 109.20, it may well decrease to 108.35. If the quote edges higher after the release of the US inflation data, it may reach the target level of 110.47. It will be possible to predict its trajectory more accurately only by tomorrow's Asian session.
At the same time, the trajectory of the AUD/USD pair is more predictable. Yesterday, the Australian dollar fell by 10 pips, which signaled the start of the downward movement. Technical analysis also confirms our previous forecast. So, the quote is highly likely to sink to 0.7640. Such attempts were already made at the end of last week. This week, the pair may also try to break below this level.
Currently, the news feeds do not contain any market-driving events. However, market sentiment could be improved by the report on a possible de-escalation of the US-China trade relations. US President Joe Biden has withdrawn the ban on new downloads of the WeChat and TikTok apps and ordered a review of the security risks associated with them. However, there are so many ifs in this situation that it is too early to make any predictions.
Investors welcomed the report on a slowdown of inflation in China in May. Yet, the producer price index jumped to 9% per annum which adversely affected market sentiment and investors ignored previously published positive reports.
Currently, we can only wait for inflation and jobs data and only then make an in-depth analysis. Stay up to date with the latest market events and do not miss our next video review!