High-tier data releases from EU and US to ramp up volatility

Despite the upbeat market mood, the US Dollar (USD) preserves its bullish momentum in the second half of the week. Eurostat will release the May inflation figures in the European session and the European Central Bank will publish May Monetary Policy Meeting Accounts. In the second half of the day, ADP Employment Change for May, the US Department of Labor’s weekly Initial Jobless Claims data and the ISM Manufacturing PMI survey will be featured in the US economic docket.

US ADP Employment, ISM Manufacturing PMI Preview: First down, then up for US Dollar?

The US Dollar Index (DXY) touched its strongest level since mid-March above 104.50 on Wednesday after the US Bureau of Labor Statistics (BLS) reported that the number of job openings on the last business day of April stood at 10.1 million, compared to 9.74 million in March and the market of 9.37 million. Meanwhile, the Federal Reserve noted in its Beige Book that there was little change in the overall economic activity in April and early May. “Prices rose moderately over the reporting period, though the rate of increase slowed in many Districts,” the publication further read.

Investors breathed a sigh of relief late Wednesday after the House of Representatives passed a bill to suspend the debt limit through January 1, 2025. The DXY retreated from daily highs following this development but closed in positive territory. On the other hand, major equity indexes in the US, which closed before the vote, registered losses while the benchmark 10-year US Treasury bond yield managed to recover toward 3.7%. Early Thursday, US stock index futures trade flat while the 10-year yield holds near 3.7%. It’s also worth noting that Philadelphia Federal Reserve (Fed) Bank President Patrick Harker and Fed Governor Philip Jefferson both said on Wednesday that they were in favor of skipping a rate hike at the next meeting. These comments, however, don’t seem to be having a negative impact on the USD’s valuation for the time being.

Pressured by the broad USD strength, EUR/USD continues to trade on the back foot below 1.0700 on Thursday. The annual Harmonized Index of Consumer Prices is forecast to rise 6.3% in the Eurozone in May, compared to 7% increase recorded in April.

After having closed the first three trading days of the week in positive territory, GBP/USD has lost its traction and started to stretch lower toward 1.2400 in the early European session.

USD/JPY regained its traction on Thursday and advanced toward 140.00. The data from Japan revealed earlier in the day that Capital Spending rose 11% in the first quarter, much higher than the market expectation for an increase of 5.5%.

Gold price climbed above $1,970 on Wednesday but erased a large portion of its daily gains before closing slightly above $1,960. XAU/USD stays under modest bearish pressure in the European morning and trades near mid-$1,950s.

Bitcoin continues to decline on Thursday and was last seen losing 1.5% on the day at around $26,800. Ethereum lost more than 1% on Wednesday and extended its slide toward $1,850 early Thursday.