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26.05.2023, 04:48

Forex Today: Market attention turns to US PCE inflation data

Here is what you need to know on Friday, May 26:

The US Dollar (USD) stays relatively quiet against its rivals early Friday after having registered gains for four straight days this week. The US Bureau of Economic Analysis (BEA) will release the Personal Consumption Expenditures (PCE) Price Index data, the Federal Reserve's preferred gauge of inflation, for April alongside Personal Income and Personal Spending figures. The US economic docket will also feature Durable Goods Orders report and the University of Michigan’s Consumer Sentiment Index (final) for May. 

The USD extended its weekly rally on the back of robust macroeconomic data releases during the American trading hours on Thursday and the US Dollar Index touched its highest level since mid-March above 104.00. The BEA announced that it revised the annualized Gross Domestic Product (GDP) growth for the first quarter to 1.3% from 1.1% in the first estimate. Additionally, weekly Initial Jobless Claims for the week ending May 20 came in at 229,000, compared to the market expectation of 245,000. 

In the meantime, US House Speaker Kevin McCarthy said on Thursday that they are yet to reach an agreement on debt ceiling but noted that negotiators will continue to work to get a deal done. US stock index futures trade modestly lower on the day and the benchmark 10-year US Treasury bond yield consolidates its weekly gains at around 3.8%.

EUR/USD came within a touching distance of 1.0700 but the risk-positive market atmosphere helped it erase a small portion of its daily losses in the late American session on Thursday. Early Friday, the pair continues to inch higher toward 1.0750.

GBP/USD lost nearly 50 pips on Thursday but managed to hold above 1.2300. In the European morning, GBP/USD clings to small daily gains while trading below 1.2350. The UK's Office for National Statistics (ONS) will release Retail Sales numbers for April.

The data from Australia showed in the Asian session that Retail Sales remained unchanged in April, against the market expectation for a growth of 0.2%. AUD/USD largely ignored this report and stabilized above 0.6500 early Friday after having lost more than 100 pips so far this week.

USD/JPY renewed its highest level since November above 140.00 on Thursday but retreated below that level in the Asian trading hours on Friday. The data from Japan revealed that the Tokyo Consumer Price Index rose 3.2% on a yearly basis in May. This reading came in much lower than analysts' forecast of 3.9% and followed the 3.5% increase recorded in April.

Rising US Treasury bond yields continued to weigh heavily on Gold price on Thursday and XAU/USD dropped below $1,940 for the first time since mid-March. The pair stages a recovery early Friday and trades near $1,950.

Bitcoin registered small gains on Thursday but failed to gather bullish momentum. Early Friday, BTC/USD fluctuates in a tight channel near $26,500. Following Wednesday's sharp decline, Ethereum seems to have stabilized at around $1,800 in the second half of the week.

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