What you need to take care of on Thursday, May 26:
The greenback aimed to recover ground but pared its advance during US trading hours, ahead of the FOMC Meeting Minutes. The document showed that all members supported plans to reduce the balance sheet, while some added that, after the runoff was well underway, it would be appropriate to consider sales of mortgage-backed securities.
Also, all participants at the central bank’s May policy meeting agreed that a half-percentage-point interest rate hike was appropriate, while most judged such a hike would be appropriate at the next couple of meetings. Chances of a 0.50% rate increase in September have decreased sharply with the news, which in turn gave a late boost to Wall Street. Indexes posted substantial gains ahead of the close, after spending the day around their opening levels.
US government bond yields remained stable, ending the day little changed on Thursday.
Mounting tensions between the US and China after US President Joe Biden said that his country would militarily defend Taiwan in the event of a Chinese invasion weighed on the market’s mood, alongside slowing economic growth and lingering inflation.
The European Central Bank published the Financial Stability Review, which took its toll on the shared currency, as policymakers noted that "an abrupt increase in real interest rates could induce house price corrections” while adding that "further corrections in financial markets could be triggered by escalation of war, even weaker global growth or if the monetary policy needs to adjust faster than expected."
Data kept disappointing, as Durable Goods Orders were up a modest 0.4% in April, below the 0.6% expected.
The EUR/USD pair trades around 1.0680, while GBP/USD reached fresh daily highs at the end of the day, now trading around 1.2570. Commodity-linked currencies advanced during the American session against the greenback, with USD/CAD down to 1.2810 and AUD/USD pressuring the 0.7100 figure.
Gold recovered from $1,841.84 a troy ounce, a fresh weekly low, to settle around $1,855. Crude oil prices remained stable, as WTI trades at $110.60 a barrel.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
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