The coming trading day is loaded with market-worthy data. In the US the April consumer inflation report (CPI) to be released at 12:30 GMT, expecting to affect the forecasts of further hikes as the year progresses from the FOMC. Having in mind the dollar’s rebound recently, USD could be seemed ‘overbought’ if the data disappoints and encourages profit taking. That said, the USD’s bounce has been steady and has been building up over the past months. The EUR/USD is trading up slightly into the 1.1874 ahead of the European market session. European markets are going to be a slow on Thursday with Germany, Switzerland, and France off for Ascension Day.
But the top event on this day is the BOE’s latest monetary policy decision, after UK’s release of the monthly Industrial and Manufacturing Production figures, ahead in the London session. The BOE is highly unlikely to move its benchmark rate at this meeting, but its Quarterly Inflation report and Governor Carney presser can offer important detail for a monetary policy backdrop that has seen a remarkable swing over the past month. The probability of a rate hike by mid-year from the BoE dropped from near certainty to virtually impossible over that time frame.
The Japanese Yen remained weak against a generally stronger US Dollar following the economic data released on Thursday. Japan’s March trade balance rose above expectations and Japan’s overall current account stood in surplus again well above expectations, but still hasn’t affected the pair much, with USD/JPY still climbing. The summary of opinions from the Bank of Japan’s last monetary policy meeting was released simultaneously highlighting the need to continue with powerful monetary easing.
Both Brent crude Oil and WTI crude Oil hit highest since November 2014, with oil prices setting fresh multi-year highs, as the possibility of US sanctions against Iran and faster tightening of the oil markets is growing stronger. Saudi Arabia has expressed readiness to increase production to make up for any shortages resulting from the Iran deal fallout, although that is not having any calming effect on oil markets. Further, the drop in the US oil inventories, as reported by the Energy Information Administration, may have also played a role in pushing oil prices to fresh 3.5-year high.
With April’s US CPI report is in focus, Gold will be affected by the USD movement. An above-estimations reading will likely put a bid under the dollar, resulting in a fresh wave of selling in gold, while a below-estimations print could generate a pullback in the USD, leading to a corrective rally in gold.