U.S. Housing Starts, UoM Consumer Sentiment & Inflation Expectations

The EUR/USD pair traded higher on Thursday, gaining 0.09% as the Euro found support amid broad-based US Dollar weakness following the release of softer-than-expected US Producer Price Index (PPI) and Retail Sales data for April.

Data released by the US Bureau of Labor Statistics showed that producer inflation cooled further. Headline PPI rose by 2.4% year-over-year in April, below market expectations of 2.5% and easing from the previous 2.7%. Core PPI, which strips out volatile food and energy prices, increased by 3.1% annually — in line with forecasts but slower than March’s upwardly revised figure of 4.0%. On a monthly basis, both headline and core PPI posted unexpected declines of 0.5% and 0.4%, respectively. This follows similarly soft Consumer Price Index (CPI) data released earlier this week, reinforcing views that inflationary pressures in the US are easing.

The latest figures reduce the urgency for the Federal Reserve (Fed) to maintain a restrictive monetary policy stance. However, Fed officials remain focused on elevated consumer inflation expectations, suggesting that immediate rate cuts are unlikely, especially amid the uncertainty introduced by President Trump's recent tariff policies.

Meanwhile, US Retail Sales — a key gauge of consumer spending — rose by 0.1% in April, slightly better than the flat reading expected by markets.

The Euro has remained firm even as European Central Bank (ECB) officials continue to signal openness to further rate cuts amid easing inflation in the eurozone. The key driver for the Euro in the near term will be the trajectory of EU-US trade negotiations. Progress has stalled, but EU officials maintain a constructive stance.

Gold prices rebounded on Thursday recovering from a five-week low as weaker US economic data fueled expectations of potential monetary policy easing.

The precious metal found support after the latest US inflation and consumer spending data signaled a cooling economy. These figures follow similarly soft Consumer Price Index (CPI) data earlier this week, reinforcing the view that inflation pressures are easing.

Meanwhile, weekly Initial Jobless Claims for the period ending May 10 held steady at 229,000, in line with expectations.

Following the data, gold climbed from an intraday low of around $3,120, reclaiming the psychologically important $3,200 level.

Market sentiment shifted toward a more dovish outlook for the Federal Reserve.

Investors will turn their focus to upcoming commentary from Federal Reserve officials and the release of the University of Michigan’s Consumer Sentiment report. These events may offer further insight into the Fed’s policy outlook and provide direction for gold prices heading into the week’s close.

Oil prices retreated on Thursday, pressured by mounting expectations that a potential U.S.-Iran nuclear deal could lead to a partial lifting of sanctions, releasing additional Iranian crude into the global market.

The slide in prices followed remarks from U.S. President Donald Trump, who said that the United States was nearing a nuclear agreement with Iran, and that Tehran had “sort of” accepted the proposed terms. An Iranian official, speaking to NBC News, expressed Tehran’s willingness to commit to a deal in exchange for the lifting of economic sanctions.

According to analysts, any immediate sanctions relief resulting from a nuclear agreement could unlock as much as 800,000 barrels per day of Iranian crude — a development that would be decidedly bearish for oil prices amid already ample supply.

Beyond Iran, geopolitical tensions in Eastern Europe also factored into oil market sentiment. Russian President Vladimir Putin rejected a proposed meeting with Ukrainian President Volodymyr Zelenskiy in Turkey, diminishing hopes for a breakthrough in the ongoing war. Zelenskiy called Moscow’s delegation “decorative,” suggesting that Russia remains uninterested in serious peace negotiations.

Oil markets remain highly sensitive to geopolitical developments and shifting expectations around global supply. The prospect of renewed Iranian exports, persistent stock builds in the U.S., and a mixed demand outlook suggest continued volatility in the near term.

U.S. equities advanced on Thursday, led by the US 500 and US 30, as weaker economic data bolstered expectations for Federal Reserve rate cuts, pushing Treasury yields lower.

Investor sentiment was buoyed by the latest economic indicators showing a cooling U.S. economy. April’s Producer Price Index (PPI) fell 0.5% month-over-month — its first decline since 2023 — while the core PPI, which strips out food and energy, dropped 0.4%. The data follows a softer Consumer Price Index (CPI) report earlier this week, which showed annual inflation easing to 2.3%, the slowest pace since February 2021.

Walmart delivered stronger-than-expected Q1 earnings, reinforcing its position as a barometer of U.S. consumer strength. However, the retailer’s CFO cautioned that escalating tariff tensions could begin to lift prices in the months ahead. Walmart reiterated that American shoppers remain focused on value and resilient despite economic uncertainty.

Alibaba missed estimates on both revenue and earnings for its fiscal fourth quarter, citing ongoing challenges in China’s consumer market.

In tech, Cisco Systems raised its annual guidance, buoyed by solid demand for networking infrastructure driven by AI-related cloud expansion.