Inflation in three German states inched up in May, with rates rising in North Rhine-Westphalia, Bavaria, and Saxony. However, inflation in Brandenburg nudged down. Economists forecast Germany’s harmonized inflation rate to be 2.7% in May, up from 2.4% in April.
Silver found temporary support near .20 after correcting from a weekly high of .30. The Dollar declined further after the U.S. Department of Labor reported higher jobless benefits claims for the week ending May 24. The slower US growth rate in the first quarter also weighed on the Dollar. The DXY Dollar Index corrected further to 104.76. A downside move in the US Dollar is favorable for dollar-denominated assets such as silver. The uncertainty over the near-term outlook of silver remains ahead of the U.S. core Personal Consumption Expenditure Price Index data for April. The Federal Reserve’s preferred inflation gauge will influence speculation for Fed rate cuts in September. Financial markets expect the Fed to start reducing interest rates from the last quarter of the year.
The GBPUSD pair weakened to 1.2695 in early Asian trading on Thursday due to a stronger US Dollar supported by higher US yields and lower bets of a Federal Reserve rate cut in September.
Business owners in the north filed an objection to the new minimum wage, which is set to be raised to a gross figure of 34,070TL (€975) at the end of the month. The new minimum wage is now just €25 lower than the Republic of Cyprus’s minimum wage.
– British retail sales bounced back in May after a slump in April that could have been caused by the timing of Easter and bad weather.
– The Confederation of British Industry’s monthly retail sales balance recovered to +8 this month after tumbling to -44 in April.
– More retailers felt sales were normal for the time of year than at any other time in the past eight months.
– The CBI’s measure of selling price inflation was its slowest since August 2020 and was below its long-run average.
– The British Retail Consortium said its measure of shop prices showed the weakest increase in two-and-a-half years this month.
– Falling inflation and continuing real wage growth will contribute to a healthier consumer outlook, supporting the retail sector further.
Higher-for-longer interest rates are likely to remain central banks’ main strategy for the rest of the year, according to the CEO of a leading financial advisory and fintech firm.
The EURUSD pair fell to 1.0830 in European trading after failing to reach a two-month high near 1.0900. ECB governing council member Klaas Knot suggested a gradual rate-cut approach based on recent data showing wage growth and improved Manufacturing PMI. The Dollar’s DXY Index recovered to 104.80 due to market sentiment. Investors are now expecting the Fed to start reducing interest rates in the last quarter of the year.
Oil prices rose on Wednesday as major producers are expected to extend output cuts at a meeting on Sunday. Traders and analysts anticipate the OPEC+ group to keep voluntary production cuts of about 2.2 million barrels per day in place. The onset of the northern hemisphere summer season, when demand for road and aviation fuels peaks, is also supporting prices.
– Prime Minister Rishi Sunak called a summer election in the UK, surprising many and giving a modest boost to the pound.
– Keir Starmer’s Labour Party has been leading in opinion polls since Sunak took power in 2022.
– UK equities tend to be quite flat in the six months after a national election, with the FTSE 250 outperforming the FTSE 100.
– The pound is sensitive to election time, reflecting international investor opinion about the UK and expected government policies.
– Sectors like Natwest Group, housebuilders, and the water sector will be under scrutiny during the election.
– Bond market investors will closely examine the two parties’ spending plans, especially Labour’s, to ensure bond market stability.
– Credit default swap markets currently price the UK as if it had a higher credit rating than it actually does.
UBS Global Research raised its year-end target for the benchmark S&P 500 index to 5,600 points, marking the highest forecast among major brokerages.