- US CPI inflation reached 13 year high
- US initial jobless claims fall to near 15-month low
- ECB pledges faster bond-buying
Today's US data showed that the annual inflation rate in the US surged to 13-year highs of 5%, well above the 2% inflation target, but the Fed is not expected to take any action anyway. Therefore, despite such a strong price pressure, the indices on Wall Street reached new historical highs. Interestingly, when the last time inflation hit this level, then-Fed chairman Paul Volcker raised interest rates to 20%. Meanwhile initial jobless claims dropped to 376k, the lowest level in nearly 15 months and compared with analysts’ estimates of 370k.
Wall Street continues its upward rally, however some of today's gains were erased at the end of the European session. After the US open, the S&P 500 managed to reach new historic highs, but later in the session the index pulled back below May highs.
The European Central Bank left monetary policy unchanged during its June meeting, saying it expects net purchases under the PEPP over the coming quarter to continue to be conducted at a significantly higher pace than during the first months of the year. The bank boosted the speed of bond-buying earlier this year, but a recent fall in borrowing costs in the Euro Area raised expectations that policymakers might start considering to slow the pace of purchases. Moreover, inflation within the forecast period is to remain below the target, which theoretically gives a chance to maintain a very loose monetary policy for a longer period of time. High inflation in the US, dovish Fed led to a marked decline in the EURUSD pair. European equity markets finished Thursday's session near the flatline, and the DAX closed 0.06% lower, despite a slightly dovish ECB.
Oil prices fell sharply after the US lifted sanctions against three Iran officials. The operation of the Treasury Department, however, was not related to the nuclear negotiations and it later turned out that sanctions were removed from people no longer associated with the Iranian government.
GOLD was trading under pressure during the European session, however sellers failed to break below major support at $1877 which coincides with the upward trendline and the 50% Fibonacci retracement of the recent downward wave. Buyers regained control after economic data showed the US consumer price inflation jumped in May to 5%. If the current sentiment prevails then resistance at $1920 may be at risk. Source: xStation5
