Daily Market Brief: Key Levels and Economic Updates
Key Gold Price Zones to Watch
- 2350
- 2335
- 2325
Gold prices inched up by 0.2%, reaching $2,341.92 per ounce. Market indicators are pointing to an excess supply ahead of the upcoming OPEC+ gathering this weekend.
Federal Reserve and Economic Data
A day before the Federal Reserve reviews its preferred inflation metric, new data indicated that the U.S. economy expanded at a more modest rate. Revisions suggest both consumer spending and inflation have moderated. This economic downshift may strengthen the argument for the Fed to begin reducing interest rates within the year. However, subdued consumer spending could raise concerns for U.S. businesses.
Treasury Yields and USD Performance
Yields on two-year Treasury notes fell by five basis points to 4.92%. The US dollar slumped again yesterday, erasing Wednesday’s gains as US economic data sent dovish signals and brought yields lower. Fedspeak had little new message and continued to reiterate high-for-longer.
Bank of Japan and Yen Monitoring
Market participants are closely monitoring the Bank of Japan for any signs of adjustments in its bond-buying activities and its strategy for June. The release of Tokyo's May inflation figures could provide clues about the BOJ's trajectory toward policy normalization. Traders are also keeping an eye on the Ministry of Finance's currency intervention records, especially with the yen hovering near the 157 level against the dollar—a threshold where Japanese authorities are rumored to have previously intervened to bolster the currency.
Macro Updates
US Economic Data
- Q1 GDP Growth: Revised down to 1.3% from 1.6%, with consumer spending estimates eased from 2.5% to 2.0%.
- Price Metrics: Q1 PCE prices were also revised down.
- Weekly Jobless Claims: Increased to 219k (vs. 217k expected and 216k previous), indicating a slowly loosening labor market and a potential rise in the unemployment rate.
Today's April PCE data is the next key test of inflation dynamics in the US.
Federal Reserve Commentary
NY Fed President Williams noted the lack of progress on lowering inflation but suggested it should moderate in the second half of the year. He believes current policy is well positioned to get inflation back to target. Although no clear signal on potential rate cuts was given, his comments continued to suggest that a rate hike is not on the table.
Japan's Inflation Data
- Tokyo CPI (May): Headline CPI jumped to 2.2% YoY from 1.8%, as expected.
- Inflation ex-Fresh Food: Rose to 1.9% YoY from 1.6% in April.
- Core-Core Measure: Softer at 1.7% YoY from 1.8%.
The BOJ has been signaling further tightening, and this inflation print supports the possibility of additional actions to normalize policy and support the yen.
Upcoming Macro Events
- China PMIs (May)
- EZ Flash CPI (May)
- US PCE (Apr)
- Canadian GDP (Q1)
- US Dallas Fed (Apr)