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The US dollar traded overall lighter as seen in the performance of the USDX with a gradual decline observed after the volatility settled following the release of the CPI statistics. This also allowed many EM pairs to move lower, especially the USD/TRY with the lira further recovering from its relatively recent all-time low.
While cryptos moved overall lower, the results among the different to market cap cryptos were still quite mixed with Bitcoin retaining most of its gains from Wednesday compared to Ethereum which moved again towards the lower end of the $2,400-level.
BTC dominance has thus also improved to more than 42% with the BTC/ETH rate reaching the highest level for June. Some see the adoption of Bitcoin as legal tender in the Central American country of El Salvador be positive for the cryptocurrency.
While the US 500 index reached a new all-time high and the US Tech 100 also extended higher, many other equity indices around the globe were moving overall rather sideways or even lower like the Italy 40 or the Europe 50, which traded almost unchanged.
Relatively few major data releases are scheduled for Friday besides the Michigan Consumer Sentiment index.
While at the time of the release of the monthly CPI figures heightened volatility could be observed also in the currency markets, at the end of the day the EUR/USD pair traded almost unchanged with a minor downside. This meant as the dollar weakened against many other majors, that the euro was also depreciated against some majors like the GBP, CHF and JPY.
It its monetary policy decision the European Central Bank (ECB) confirmed that it would retain the bond purchase program in place (PEPP) until March 2022, but also would judge the conditions to taper only once it sees the crisis as being over. The central bank did not seem to be particularly worried about rising inflation as it sees it declining later on, once “temporary factors fade out” and expects headline inflation to “remain below our aim over the projection horizon”.
Industrial production data from Europe was mixed with the French statistic showing an unexpected decline of 0.1 % in April, while the Italian statistic improved by 1.8%.
On Friday Spanish CPI as well as the Italian labour market statistic for Q1 can be expected. Next week data from other major EU economies will come in like the CPI from Germany, France and Italy as well as the EU trade balance statistics that will be published on Tuesday.
Gold traded with a significant volatility around the time of the consumer price index (CPI) announcement for the US and after a brief dip, surged higher as inflation continued to rise faster than anticipated with the annualized CPI showing an increase of prices by 5.0 % compared to the same month a year ago and even the Core CPI surged 3.8 % higher. This index seeks to outline longer term inflation patterns as it excludes rather volatile items in the basket, especially food and energy. So the increase in inflation cannot be blamed only on energy prices alone, which were significantly depressed during the first year of the pandemic-related lockdowns.
Silver prices also rallied higher. Platinum and palladium prices on the other hand did not benefit from this upside move with palladium settling moderately lower and platinum trading close to unchanged after another volatile trading day.
On Friday the weekly Commitment of Traders (COT) reports will be released by the US CFTC, which show among others also the net speculative positions in US commodity futures like gold and silver.
Oil prices settled higher on Thursday, recovering from the losses seen on Wednesday and briefly reaching intraday a new post-pandemic high in the WTI crude oil contract.
In its monthly oil market report OPEC reiterated its predictions that demand would continue rising in the second half of this year as the recovery after the pandemic continues following the reduced lockdowns across many regions. OPEC estimates that compared to the previous year, demand would increase by 5.95 million barrels per day.
Daily TSA checkpoint travel numbers statistics also support a thesis as more and more travellers are reported. While the 1.67 million travellers reported for Wednesday was more than in the same day over the past weeks, compared to 2019 there is still a significant gap in activity.
On Friday the weekly US Baker Hughes Oil Rig Count number is published. Last week it remained unchanged at 359 oil rigs in operation.
Sentiment among the different major equity market indices in the US was quite mixed on Thursday with the US 2000 once again declining and the US 30 index also unable to hold its intraday gains as the weak performance of especially Caterpillar (-3.72%) as well as some banks like Goldman Sachs (-2.70%) and JPMorgan Chase (-1.71%) were dragging the index performance down, despite sizable gains by Walgreens Boots (+3.64%) and Merch & Co (+3.00%).
Meanwhile the US 500 and US Tech 100 indices surged higher with the former reaching a new all-time high during the trading session.
Cannabis shares (Global Cannabis ETF -2.63%) were meanwhile under pressure with stock like Aurora Cannabis (-3.46%) and Tilray (-6.81%) ending the day deep in the red.
Next week again rather few major companies are due to release their quarterly results including Oracle on Tuesday and Adobe on Thursday.
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