US Dollar losses traction and hits lowest level in a week

Key Movers

The EUR regained momentum and reached a new peak for the day, surpassing 1.0720. Despite the positive ADP employment data, a downward revision of Unit of Labor Costs in the first quarter initiated a renewed wave of selling pressure on the USD, subsequently driving an increase in the pair's value. Today’s data from the eurozone revealed that inflation within the group of 20 countries sharing the euro declined to 6.1% in May, compared to 7.0% in April. This figure fell below the anticipated 6.3%. It is important to note that the current inflation level remains over three times higher than the European Central Bank's target of 2%. In a speech, Lagarde expressed her concern about the current high level of inflation, stating that it is expected to persist for an extended period. She emphasized that there is still progress to be made in raising interest rates to a level that is considered sufficiently restrictive.

The GBP continues its upward movement against the dollar as it soars over the 1.2500 level. The pound is taking advantage of the weakness of the US dollar which is in a state of decline against other currencies. Among the Group of Seven economies, the UK is currently experiencing the slowest economic growth and the highest level of inflation. Many analysts believe that the Bank of England was not prompt enough in raising interest rates. As a result, the BoE will likely need to raise rates once again this month. In theory, this should provide an advantage to the pound over the dollar.

USD/CAD remains at the lower end of the weekly range, continuing its fall from the previous day. This decline is influenced by a slight positive risk sentiment and stronger oil prices, while the US dollar remains sluggish. As a result, the USD/CAD pair is currently showing minor losses, trading near 1.34750. WTI crude oil experienced an increase in value, reaching approximately $70.382, as buyers re-emerged after it reached its lowest level in a month, halting the two-day downward trend. Despite the unexpected increase in oil inventories according to industry reports, the price of oil remains unaffected ahead of the upcoming OPEC+ meeting. This could be attributed to positive market sentiment, the recent improvement in China's Caixin Manufacturing PMI, and the US Dollar's limited appreciation.