US Core PCE Preview: Why this is a lose-lose situation for the US Dollar

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The Euro outperformed on Wednesday, amid rising odds (still low) of a 50 basis points rate hike from the European Central Bank next week.  Germany, Spain and France will release inflation data on Friday, alongside Eurozone Q1 GDP.  EUR/USD climbed to 1.1094, reaching the highest intraday level since March 2022 and then pulled back trimming gains.

USD/JPY ended flat around 133.60 amid relatively steady bond yields and a mixed Dollar. On Thursday, the two-day monetary policy meeting kicks off at the Bank of Japan, the first one under Kazuo Ueda. No change is expected.

Inflation slowed further during the first quarter in Australia, cementing the case for the Reserve Bank of Australia (RBA) to stay on hold next week. AUD/USD dropped again, reaching monthly lows under 0.6600. NZD/USD continued to move slowly toward 0.6100 and March lows. The ANZ's Business Outlook survey is due on Thursday. USD/CAD rose marginally, holding above 1.3600.

Metals remained sideways. Gold ended lower at $1,988 after hitting a weekly high at $2,009; while Silver slipped below $25.00. Crude oil prices lost more than 3%; WTI fell to $74.50, erasing April’s gains.

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