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Europe’s Final CPI & U.K. BOE Gov Bailey’s Speech Will be Key Driver


Dollar strengthens against its major currency peers as all eyes are on debt ceiling talks to avert a possible default that could reverberate across asset markets and damage confidence in the world’s largest economy.

Dollar index settled at 102.6040, up 0.18%, while USDINR settled at 82.24, almost flat.

A rise in the dollar and Treasury yields was accompanied by a sharp decline in bullion prices as a result of the tension around the US debt ceiling. Whereas copper prices hit over five-month lows on more weak economic signals from China. Gold prices settled with a loss of 1.28% at 60244. Silver settled with a loss of 1.11% at 72585.

A rebound in the dollar and, U.S. Treasury yields weighed on the yellow metal as negotiations continued over raising the U.S. debt ceiling ahead of a June 1 deadline.

Copper price slid by 1.74% and settled at 715.45. Zinc lost by 1.62% and settled at 225.35. Aluminium prices were down by 0.51% at 206.65.

Crude Oil prices had a neutral trade yesterday, as traders remained cautious after a surprise rise in U.S. crude inventories. As discussions over raising the U.S. debt ceiling continued in advance of a June 1 deadline, a rebound in the dollar and U.S. Treasury yields put pressure on the yellow metal.

Brent crude futures were down by 1.10% to $74.66 a barrel. U.S. West Texas Intermediate crude was at $70.51 a barrel, down 1.07%. MCX crude oil was down by 0.49% and settled at 5834

Economic data and events to watch

Japan

At 10.00 am – Revised Industrial Production m/m will have a strong impact on the Yen. Data is foreseen at 0.8%, unchanged from the previous.

U.K.

At 3.20 am -BOE Gov Bailey Speaks will have to be closely watched.

Eurozone

At 1.30 pm- Italian Trade Balance to be released. Data is foreseen at 2.50B from 2.11 B.

 At 2.30 pm – Euro will react strongly on Final CPI y/y, and Final Core CPI y/y. Both data are foreseen at 7.0% and 5.6%, unchanged from the previous.

The above data is expected to have a mixed impact on the Euro.

US

At 6.00 pm – Building Permits are due to release. Data is foreseen at 1.44M higher from 1.43M previous.

Housing Starts, data is foreseen at 1.40M lower than the previous 1.42M 

At 8.00 pm – Crude Oil Inventories

Above data could have a mixed impact on the dollar.