PlusMarkets Analysis • June 10, 2021
Gold was down on Thursday morning in Asia against a firmer dollar, as investors await U.S. data to get further signals on the inflation level and economic recovery from the COVID-19 pandemic.
Gold Futures were down 0.35% to $1,888.95 by 11:23 PM ET (3:23 AM GMT). The dollar, which usually moves inversely to gold, inched up while the benchmark 10-year U.S. Treasury yields slid below 1.50% for the first time since May 7.
Investors now await U.S. data, including the core consumer price index in May and initial jobless claims, due later in the day, to get further clues on the U.S. economic growth and the direction of the U.S. Federal Reserve’s monetary policy.
“A significant upside surprise in inflation could tilt the Fed taper discussion to sooner rather than later, though the majority would still be looking for substantial progress toward maximum employment before considering tapering.” So far though, “the market is buying into the Fed’s view that the rise in prices is transitory and the Fed will not alter its policy guidance at next week’s FOMC meeting,” ANZ economists said in a note.
Across the Atlantic, the European Central Bank’s policy decision will hand down its policy decision later in the day. The central bank will maintain its current stimulus measures in case higher borrowing costs could block a still nascent economic recovery from the COVID-19 pandemic.
Oil prices fell on Thursday as inventory data in the United States, the world’s top oil consumer, showed a surge in gasoline stocks that indicated weaker-than-expected fuel demand at the start of summer, the country’s peak season for motoring.
Brent crude oil futures were down 36 cents, or 0.5%, at $71.86 a barrel by 0651 GMT, while U.S. oil futures declined by 35 cents, or 0.5%, to $69.61 a barrel.
“Markets had been optimistic on demand as the U.S. enters the peak summer driving season,” analysts from ANZ Research said in a note on Thursday.
“An acceleration in (coronavirus) vaccinations and rising traffic numbers are a plus for demand for transportation fuel. However, this data highlights it won’t be a smooth road back to recovery.”
The dollar edged higher in early European trade Thursday, amid cautious trading with traders looking towards key U.S. inflation data and an ECB meeting for clues of future direction.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.1% at 90.180, continuing to fluctuate narrowly around the psychologically-important 90 level,
EUR/USD traded 0.1% lower at 1.2167, falling back from the one-week high of 1.2218 seen during the previous session, USD/JPY dropped 0.1% at 109.55, GBP/USD fell 0.1% to 1.4112, while AUD/USD was up 0.1% at 0.7737.
Activity within the foreign exchange market has been limited all week, leaving major currencies mostly range-bound, with traders cautiously awaiting the release of the U.S. Labor Department’s consumer prices data for May.
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