Forex News
- EUR/USD trades slightly higher as USD weakens despite solid US economic data.
- US PCE inflation rose to 4.1% YoY in May, while core PCE increased 3.4% YoY, both matching market expectations.
- US labor and growth data remained resilient, with Jobless Claims falling to 215K and Q1 GDP revised up to 2.1%.
The EUR/USD pair elevated slightly near 1.1380 trades with mild gains on Thursday, as the US Dollar (USD) loses momentum despite a fresh batch of United States (US) economic data showing sticky inflation, stronger growth, and resilient labor market conditions.
Annual inflation in the United States, measured by the Personal Consumption Expenditures (PCE) Price Index, climbed to 4.1% in May from 3.8% in April, according to the US Bureau of Economic Analysis. The reading came in line with market expectations. In the same period, the core PCE Price Index, which excludes volatile food and energy prices, rose by a tenth of a percentage point to 3.4% YoY, also matching forecasts.
Earlier in the day, US data showed that Initial Jobless Claims fell to 215K in the week ending June 20, below expectations and down from the previous revised 227K reading. Meanwhile, the final estimate of first-quarter US Gross Domestic Product (GDP) showed the economy expanding at an annualized rate of 2.1%, revised higher from the previous estimate of 1.6%.
On the Eurozone side, German sentiment data offered modest support to the Euro as the GfK Consumer Confidence Survey for July improved slightly to -29.2 from a revised -29.7, although the reading remained weak.
Short-term technical analysis:
On the 4-hour chart, EUR/USD trades at 1.1380, maintaining a bearish near-term bias as it remains below both the 20-period Simple Moving Average (SMA) at 1.1383 and the 100-period SMA at 1.1521. Short-term price action is pressing against immediate overhead supply clustered around the 20-period SMA and the nearby horizontal resistance at 1.1388, while the Relative Strength Index (RSI) has recovered toward the mid-40s, hinting at stabilizing momentum but not yet signaling a decisive bullish shift.
On the downside, initial support emerges at 1.1360, with further floors at 1.1336 and 1.1324 if selling pressure resumes. On the topside, a break above the tight resistance band formed by the 20-period SMA at 1.1383 and the 1.1388 horizontal barrier would be needed to ease immediate downside pressure, while the 100-period SMA at 1.1521 remains a more distant cap on any sustained recovery attempts.
(The technical analysis of this story was written with the help of an AI tool.)
- The Dow Jones Industrial Average notched a fresh intraday record, lifted by healthcare, financials and industrials as money rotated out of technology.
- Surging memory chip prices split the market, rewarding chipmakers while squeezing Big Tech buyers like Apple.
- In-line core PCE and a hot first-quarter GDP print keep the Fed's restrictive hold firmly in place.
The Dow Jones Industrial Average (DJIA) printed a fresh intraday record near 52,650 on Thursday before easing back toward 52,200, and the temptation is to read that high as a broad vote of confidence. It was nothing of the sort. The blue-chip index was up about 0.7% on the session while the Nasdaq Composite slipped around 0.3%, a split that says money was not flooding in so much as shuffling between names. The record was built on the corners of the market that have spent the year out of fashion: healthcare, financials and industrials. Johnson & Johnson and JPMorgan Chase each added more than 2%, and Caterpillar jumped close to 5%.
The unfashionable do the lifting
What usually leaves the Dow lagging during an artificial intelligence (AI) melt-up worked in its favour here. Its price-weighted, industrial-heavy construction means it carries less of the megacap technology that drives the broad indices, so it barely noticed those names rolling over. With cyclical and value stocks doing the heavy lifting, the rotation that hammered momentum read as a tailwind rather than a drag.
The chip boom cuts both ways
The engine here is the memory market, and it is running hot. Demand for the high-bandwidth memory (HBM) that feeds AI data centres has pulled manufacturing capacity away from conventional chips, and prices for everyday memory have climbed sharply through the year. For the companies that make the stuff, that is a windfall. Micron surged around 14% after a blowout quarter, posting record revenue, margins north of 80% and its premium memory sold out into next year. Qualcomm added roughly 6% on firmer guidance, and sympathy bids lifted other chip names including Western Digital and Applied Materials.
The other side of that same trade is far less cheerful, because every company that buys chips rather than sells them now faces a rising input bill. Apple dropped close to 5% after lifting MacBook and iPad prices and blaming component costs. Alphabet and Meta each shed about 1% on the worry that fatter memory bills will crimp margins. The AI boom has stopped being a tide that lifts all of technology; it is now a transfer of value from the firms that consume silicon to the few that produce it.
Sticky inflation, resilient growth
The Personal Consumption Expenditures Price Index (PCE), the inflation gauge the Federal Reserve (Fed) watches most closely, rose 0.3% MoM and 3.4% YoY at the core level, both in line with expectations. That annual core reading was the firmest since October 2023, so inflation is not rolling over; landing in line simply spared the market a hawkish surprise. Headline PCE rose 0.4% MoM, a shade under the 0.5% the consensus had feared.
The growth side of the ledger ran hotter, and that mattered more for the rotation than the inflation print did. First-quarter Gross Domestic Product (GDP) was revised up to 2.1% annualized against a 1.6% estimate. Jobless claims fell to 215K, and personal income and spending each climbed 0.7%. For the Fed, which held at 3.75% last week with projections pointing to little relief this year, the mix changes nothing: growth is holding and inflation is sticky, exactly the backdrop a central bank leans on to justify sitting still. The 10-year Treasury yield eased a couple of basis points toward 4.37%, a quiet sign nobody saw reason to panic.
Where it trades from here
Resistance sits at the record zone near 52,650, and a clean break opens the 52,700 level before the 53,000 round number comes into view. With the daily Stochastic Relative Strength Index (Stoch RSI) sitting mid-range near 47, the trend reads as having room to extend rather than being exhausted.
Support runs first at the 52,200 area where the index steadied after fading from its high, then the 52,000 handle that floored Thursday's pullback. Below that, the prior June base around 51,800 is the line that would signal the rotation has curdled into something broader and uglier.
Bias stays higher while price holds above 52,000, but with a caveat that should not be ignored: this is a record carried by a narrow band of cyclicals, not the whole tape. A short-term Stoch RSI buried near 7 says the pullback is stretched, so a bounce is the higher-odds near-term path; the durability of any new high hangs on whether participation broadens or technology keeps bleeding. Records built on rotation hold up right until the rotation runs out of names to rotate into.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- Silver rebounds after two days of sharp losses and climbs back above $58 on Thursday.
- US PCE inflation data comes in broadly in line with expectations, limiting upside pressure on the US Dollar.
- A weaker US Dollar supports a technical rebound in precious metals, although expectations for restrictive monetary policy remain in place.
Silver (XAG/USD) rebounds on Thursday, trading around $58.65 at the time of writing, up 2.16% on the day. The precious metal recovers part of its steep losses from recent days, supported by a modest pullback in the US Dollar (USD) following the release of US inflation data that broadly matched market expectations.
The Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index rose 4.1% YoY in May, in line with expectations, up from 3.8% in April. The core PCE Price Index, the Federal Reserve's (Fed) preferred inflation gauge, accelerated to 3.4% YoY from 3.3%, also matching forecasts. On a monthly basis, headline PCE increased 0.4%, while core PCE remained unchanged at 0.3%.
Investors mainly focused on the lack of any major upside surprise in core inflation, prompting a modest decline in the US Dollar. The US Dollar Index (DXY) falls 0.24% to 101.30, providing support for Dollar-denominated precious metals.
Other US data released on Thursday continue to point to a resilient economy. Durable Goods Orders declined 4.5% in May, in line with expectations, while Initial Jobless Claims fell to 215K, below forecasts of 225K. Meanwhile, both Personal Income and Personal Spending increased 0.7% in May, exceeding market expectations.
Against this backdrop, markets continue to expect the Fed to maintain a restrictive monetary policy stance, although the chance of a rate hike in September eased slightly following the inflation report. This environment may continue to limit Silver's recovery potential despite Thursday's rebound.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
TD Securities commodity strategists Ryan McKay and Bart Melek note that crude Oil flows through the Strait of Hormuz are gradually normalizing, but around 10–11m b/d of Middle East production remains offline. With US inventories drawing rapidly and CTAs (Commodity Trading Advisors) only modest sellers, they argue that heavy speculative short positioning could fuel a recovery in WTI and Brent prices if output does not rebound soon.
Tight supply and CTA shorts collide
"Watch the tanker entries and new loadings. While flows transiting the Strait continue to increase, our read of fresh tanker loadings in the Mideast Gulf sits around 3.5m b/d this week, led by Kuwait, the UAE and Iran."
"These loadings are the best indication of where flows will revert to once the stranded cargoes exit the Strait. As of now, the vast majority of tanker entries remain the Iranian and/or sanctioned tanker fleet, and our read of Mideast production still points to roughly 10-11m b/d of production offline."
"Meanwhile, global inventories continue to drawdown at a fast pace, with another 15m barrels withdrawn from commercial and SPR storage in the US."
"CTAs remain modest sellers of crude oil, while spec positioning as a whole has become dangerously skewed short."
"Without a swift recovery in Middle East production in the coming weeks, continued inventory draws and bloated short positioning will create an ideal setup for a recovery in crude oil prices."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Core PCE rises 3.4%, keeping pressure on the Fed alive.
- GDP and jobless claims beat forecasts, but US Dollar slips.
- UK political uncertainty lingers as Burnham succession questions grow.
The Pound Sterling (GBP) advances 0.22% against the US Dollar (USD) on Thursday, even though the US economy grew faster than previously reported in Q1, while inflation readings suggest the Federal Reserve (Fed) needs to tighten policy. The GBP/USD pair trades at 1.3194 after bouncing off daily lows of 1.3151.
GBP/USD gains as Dollar profit-taking offsets strong US data
The US Dollar treads water even though the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, expanded by 3.4% YoY as expected, up from 3.3% in April, implying that further tightening might be needed. The US Dollar Index (DXY), which tracks the buck’s value against six currencies, is down 0.17% at 101.41.
US Treasury yields are also down, with the 10-year T-note yield down two basis points to 4.378%. US Gross Domestic Product (GDP) growth for Q1 2026 rose by 2.1% QoQ, exceeding estimates and the previous 1.6% print. Initial Jobless Claims for the week ending June 20 dipped from 227K to 215K below estimates, while Durable Goods Orders contracted -4.5% in May as expected, down from 8% gain in the previous month.
Given the backdrop, the Greenback was expected to extend its rally, but traders seem to be booking profits as money markets trimmed Fed hawkish bets for 2026.
Prime Terminal data shows that traders expect at least 30 basis points of easing towards the end of the year, down from nearly 40 on June 22.
In the UK, the docket remained absent, but the resignation of Prime Minister Keir Starmer opened the door for Andy Burnham. Burnham, who is seen as Starmer’s successor, is said not to retain Chancellor Rachel Reeves, and there’s speculation about who he would choose to succeed her.
Last year, Burnham called for an end to the UK’s dependence on foreign lenders, which triggered worries about him becoming the Prime Minister.
Mark Dowding, chief investment officer at the hedge fund RBC BlueBay, said that “He is boxed in by the fact that government finances are in a weak position, and if he chooses to ignore this reality, then he could find himself under pressure very quickly.”
Aside from this, the deal between the US and Iran pushed Oil prices lower, easing inflationary pressures. Meanwhile, the Bank of England is expected to hold rates unchanged at the July meeting, yet traders had priced in a rate hike by December.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3207. The pair remains under pressure as it holds well below the clustered 50-, 100- and 200-day simple moving averages (SMAs) grouped around 1.3437, keeping the broader tone bearish after losing the prior uptrend support line that was broken near 1.3451. The Relative Strength Index (14) at roughly 36 drifts in bearish territory but above oversold conditions, hinting that sellers retain control while still leaving room for additional downside before stretched conditions emerge.
On the topside, the SMA cluster around 1.3437 is the first significant resistance, followed by the descending resistance trend line that was last violated around 1.3537, where prior reactions suggest renewed supply. On the downside, initial demand is expected around the former rising trendline origin close to 1.3159 and the nearby recent low area around 1.3167; a decisive break beneath this band would expose deeper losses, while holding above it would merely signal consolidation within a still bearish daily backdrop.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
UOB economists Enrico Tanuwidjaja and Sathit Talaengsatya note that the Bank of Thailand (BoT) kept its policy rate at 1.00% and is expected to hold this level through 2027. They stress that Thailand’s recovery is narrow, with strength in technology exports but weak household demand and SME credit. They see cost-push inflation as temporary and not a trigger for rate hikes.
BoT seen on extended on-hold stance
"We maintain our view that 1.00% is the terminal rate for this cycle and expect the BoT to remain on hold throughout the rest of 2026 and throughout 2027. Persistent economic slack, weak demand-driven inflation, household and SME balance-sheet repair, and impaired bank-credit transmission should offset the temporary headline inflation shock. Policy support should increasingly rely on targeted fiscal, debt-restructuring, and credit-enhancement measures rather than further broad-based policy rate reductions."
"The policy guidance is best interpreted as a conditional, data-dependent hold with a high threshold for action in either direction. BoT is prepared to look through the first-round energy and production-cost shock, so long as price increases do not become broad-based and persistent, and medium-term inflation expectations remain anchored. At the press conference, the BoT indicated that the current rate should be sufficient to manage the baseline inflation path, while retaining the option to tighten should inflation materially exceed its forecast or second-round effects intensify."
"However, a pre-emptive hike appears unlikely while domestic purchasing power, SME activity, and bank credit remain weak. Equally, the MPC offered no signal of renewed easing: the repeated description of the current rate as “appropriate”, the unanimous vote, and the emphasis on fiscal and targeted financial measures suggest that 1.00% is the working terminal rate. Near-term policy attention will therefore focus on cost pass-through, inflation expectations, baht volatility, and borrower credit quality rather than on fine-tuning activity through small changes in the policy rate."
"The risks to our rate call are two-sided, but the thresholds for a move remain high. A BoT hike would require evidence that the current relative-price shock is becoming generalized—through persistent services inflation, stronger wage growth, a material rise in medium-term inflation expectations, or disorderly baht depreciation that amplifies imported-price pass-through. Our current house view is that the Fed will remain on hold through 2026 and resume easing in 2027, rather than deliver further hikes in either year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold rebounds from a more than seven-month low after the latest US inflation report.
- US PCE data came broadly in line with market expectations.
- Technically, XAU/USD remains in a well-defined downtrend, with oversold signals beginning to emerge.
Gold (XAU/USD) shows signs of stabilization on Thursday as traders digest the latest US Personal Consumption Expenditures (PCE) Price Index, which came broadly in line with market expectations. At the time of writing, XAU/USD trades around $4,036 after hitting a more than seven-month low of $3,959 on Wednesday.
The US Bureau of Economic Analysis reported that core PCE rose to 3.4% YoY in May from 3.3% in April. On a monthly basis, Core PCE was unchanged at 0.3%. Headline PCE accelerated to 4.1% YoY from 3.8%, marking its highest annual reading since April 2023.
Traders focused on the stable core PCE reading, the Federal Reserve's (Fed) preferred inflation gauge, which weighed modestly on the US Dollar (USD) and helped XAU/USD rebound from below the $4,000 mark.
Even so, the metal remains nearly 27% below its all-time high near $5,600 reached in January. The decline has been largely driven by the fallout from the US-Iran war, which boosted the US Dollar (USD), triggered liquidity-driven selling and fueled expectations that the Fed could raise interest rates later this year as elevated Oil prices pushed inflation higher.
The latest inflation data did little to challenge the higher-for-longer interest rate narrative. According to the CME FedWatch Tool, traders are currently pricing in a 60% chance of a rate hike at the September meeting, down from 67% earlier in the day.
However, with Oil prices back to pre-war levels, fears of a sustained inflationary shock have eased. Still, inflation remains well above the Fed's 2% target, suggesting monetary policy is likely to stay restrictive for longer. As a result, Gold may struggle to stage a meaningful recovery.
Additional data showed the US economy expanded at an annualized pace of 2.1% in the first quarter, up from of 1.6%, according to the final estimate.
On the geopolitical front, shipping through the Strait of Hormuz continues to improve following the interim peace agreement between the United States and Iran. The latest round of talks revealed that differences remain over inspections of Iran's nuclear program and the future management of the Strait.
Technical Analysis: Bearish trend remains intact as oversold signals emerge
On the daily chart, XAU/USD remains bearish as price holds well below the 200-day Simple Moving Average (SMA) at $4,474 and the 100-day SMA at $4,690.
The metal also remains under a downward sloping resistance trend line, whose break level comes in near $4,350, while the Relative Strength Index (RSI) at 29.87 slips into oversold territory, hinting that while selling pressure dominates, the downside could become vulnerable to short-covering bounces.
On the upside, initial resistance is seen at the horizontal barrier around $4,200, with the descending trend-line break level near $4,350 reinforcing this supply zone. Above that, the 200-day SMA at $4,474 and the 100-day SMA at $4,690 form a broader medium-term resistance band that would need to be reclaimed to ease the prevailing bearish structure.
On the downside, the next notable cushion is the horizontal support at $3,900.00, and a clear break beneath this floor would expose the metal to a deeper corrective phase despite the emerging oversold signals on momentum.
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- USD/JPY comes under pressure as the US Dollar eases after the US PCE data broadly meet expectations.
- Markets trim September Fed rate-hike bets after the inflation report.
- Tokyo CPI data on Friday could provide fresh guidance on the timing of the BoJ's next rate hike.
USD/JPY trades slightly lower on Thursday as the US Dollar (USD) eases after the latest US Personal Consumption Expenditures (PCE) data broadly matched market expectations. Still, the Japanese Yen (JPY) remains pinned near its 40-year lows. At the time of writing, the pair trades around 161.75.
Data from the US Bureau of Economic Analysis showed that the core Personal Consumption Expenditures (PCE) Price Index rose to 3.4% YoY in May from 3.3% in April. On a monthly basis, core PCE held steady at 0.3%. Meanwhile, headline PCE accelerated to 4.1% YoY from 3.8%, marking its highest annual reading since April 2023.
Traders looked past the sharp increase in headline PCE, focusing instead on the modest rise in core PCE and the steady monthly reading. Following the data release, traders scaled back expectations for a September Fed rate hike, with the probability falling to 60% from 67% before the inflation report, according to the CME FedWatch Tool.
The US Dollar gave back a small portion of its recent gains following the data. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, traded around 101.40 after climbing to a more than one-year high near 101.80 on Wednesday.
However, the US Dollar's downside appears limited as stronger first-quarter GDP growth and lower-than-expected Initial Jobless Claims highlighted the resilience of the US economy, reinforcing expectations that the Federal Reserve can afford to keep monetary policy restrictive.
Meanwhile, expectations that the Bank of Japan (BoJ) will continue to normalize monetary policy have done little to support the Japanese Yen. The wide interest-rate differential between the BoJ and the Fed continues to act as a headwind.
Even so, the Yen's persistent weakness above the 160.00 threshold keeps intervention risks elevated, limiting stronger upside moves in USD/JPY in the near term.
Attention now turns to Friday's Tokyo Consumer Price Index (CPI) report as traders look for clearer signals on when the BoJ could deliver its next rate hike.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.26% | -0.08% | -0.21% | -0.13% | -0.03% | -0.25% | |
| EUR | 0.12% | -0.12% | 0.06% | -0.07% | 0.01% | 0.13% | -0.12% | |
| GBP | 0.26% | 0.12% | 0.17% | 0.08% | 0.13% | 0.26% | -0.00% | |
| JPY | 0.08% | -0.06% | -0.17% | -0.14% | -0.07% | 0.03% | -0.20% | |
| CAD | 0.21% | 0.07% | -0.08% | 0.14% | 0.06% | 0.20% | -0.07% | |
| AUD | 0.13% | -0.01% | -0.13% | 0.07% | -0.06% | 0.11% | -0.11% | |
| NZD | 0.03% | -0.13% | -0.26% | -0.03% | -0.20% | -0.11% | -0.27% | |
| CHF | 0.25% | 0.12% | 0.00% | 0.20% | 0.07% | 0.11% | 0.27% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
MUFG highlights that strong earnings guidance from Micron Technology, a key AI memory supplier, has boosted sentiment in AI and tech stocks. Revenue guidance far exceeded expectations and new strategic agreements supported a sharp rebound in South Korean equities, with the Kospi recovering most of its earlier sell-off, though FX spillovers have remained limited so far.
Micron surprise supports AI equity sentiment
"The other main development overnight was the release of strong earnings update from Micron Technology."
"The largest US maker of computer memory chips announced that revenue in the fiscal fourth quarter will be approximately USD50 billion coming in well above analysts’ estimate of USD43.2 billion."
"Micron and its peers in the memory space such as Samsung Electronics and SK Hynix have become major beneficiaries of the AI infrastructure build out."
"The strong earnings update from Micron has helped South Korean stocks to rebound overnight after the heavy sell-off at the start of this week and will provide a boost for investor sentiment in AI/tech stocks more broadly."
"The Kospi equity index has risen by around 6% overnight and has now almost fully reversed the outsized sell-off on Tuesday."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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