Market overview

U.S. Dollar weakening amid the inflation data

EU ban on Russian oil might not occur

Gold rallies above $1,970

Crude oil holds despite the supply data

FOREX

U.S. dollar index (USDX)

The U.S. dollar weakened in early trades Thursday, retreating from a two-year high as the rally in U.S. bond yields paused for breath, ahead of a highly anticipated European Central Bank meeting. The Dollar Index traded 0.3% lower at 99.595, falling back from Wednesday’s intraday peak of 100.52, its highest since May 2020.

The benchmark 10-year U.S. Treasury yield traded at 2.684%, retreating from Tuesday’s high of 2.836% amid weaker than expected U.S. core consumer inflation.

Euro (EURUSD)

Still, the most lookout will be on the European Central Bank meeting today, to see whether the policymakers feel the need to fight record inflation levels even in the face of a potential war-induced recession. As it stands the ECB plans to end its emergency bond buying at some point in the third quarter, with interest rates going up “sometime” after that.

EUR/USD traded 0.3% higher at 1.0918, extending gains made in the previous session.

Sterling pound (GBPUSD)

The Sterling pound gained 0.2% to 1.3142, continuing to gain after climbing 0.9% on Wednesday, the biggest daily percentage gain since June 2021, after British consumer price inflation leaped to its highest level in three decades in March.

Canadian dollar (USDCAD)

The Loonie declined 0.2% to 1.2543 the day after the Bank of Canada raised rates by 50-basis points, its largest hike in around 20 years, in order to combat inflation running at a three-decade high.

Japanese Yen (USDJPY)

The Japanese yen pair fell 0.3% to 125.28, as the abandoned yen received some recess from the falling yields, making a small recovery from a 20-year low hit overnight.

Indices

U.S. indices

U.S. major benchmark indices finished the regular session in the green as investors cheered a better-than-expected initial batch of quarterly results. In regular trading on Wednesday, the Dow Jones Industrial Average advanced about 1% to 34,564.6. The S&P 500 gained 0.1% to 4,446.6 and the NASDAQ Composite advanced 2% to 13,643.59

On the economic front, market participants will be observing retail sales, import prices, and jobless claims to be released later. The tech-heavy Nasdaq index jumped over 2%, while the S&P 500 and the Dow Jones Industrial Average gained more than 1% during the early session.

European indices

European indices moved in a mixed fashion as market participants eying the European Central Bank (ECB) meeting. The European Central Bank is in the spotlight to decide the path of monetary policy against inflation. Furthermore, Concerns about a war-related recession shall be a major discussion. However, the DAX traded 0.3% higher, and the CAC 40 rose 0.6%, while the FTSE 100 shed 0.3%.

Asia-Pacific

Asia Pacific stocks were mostly green during the Asian session, as China hinted that it would loosen monetary policy further. Meanwhile, the bond market dialed back bets on aggressive interest rate hikes from the U.S. Federal Reserve.

The People’s Bank of China is expected to cut the one-year policy loans interest rate on Friday for the second time this year. The central bank could also lower the reserve requirement ratio soon, as the lockdowns to curb the country’s latest COVID-19 outbreak impact the economy. Furthermore, China’s Shanghai Composite gained 0.66% and the Shenzhen Component was up 0.35%, while Hong Kong’s Hang Seng Index was up 0.31%.

Japan’s Nikkei 225 jumped 1.12%, while the Australian ASX 200 was up 0.45%, as employment data shows that the employment change was 17,900, the full employment change was 20,500, and the unemployment rate was 4% in March 2022.

Metals

Inflation worries seemed to be pushing the latest movement for the precious metal, which stood rallying for a sixth consecutive day. Gold was aided by a U.S. dollar that traded lower as markets priced more aggressive hikes around the world while assuming all the Federal Reserves (Fed) were now priced in.

Gold closed 0.57% higher at $1977.80 an ounce overnight, before retreating slightly to $1972.50 an ounce in Asia.

Spot silver dropped 0.8% to $25.53 per ounce and platinum dipped 0.9% to $977.37, while palladium rose 0.9% to $2,354.54.

Energy

Oil prices slipped on Thursday, amid larger-than-expected build in U.S. oil stocks against tightening global supply. The probability of the EU ban on Russian oil may be zero due to the need of the it.

Despite signals that global supply disruption will persist, oil stocks in the U.S. rose by more than nine million barrels last week, the U.S. Energy Information Administration said on Wednesday, driven in part by releases from the nation’s strategic reserves.

Brent futures were down 0.5% at $108.19 a barrel, while U.S. West Texas Intermediate futures were off 0.6% at $103.68 a barrel. Both contracts on Wednesday had shrugged off a build in U.S. crude inventories to end the trading session roughly 4% higher.