Forex Today: US inflation takes center stage

What you need to know on Wednesday, May 12:

Tensions mounted as the focus is on US inflation data to be out on Wednesday. Higher commodities prices send the Chinese Producer Price Index sharply up in April, spurring concerns about rising inflationary pressures in the US. The US Federal Reserve has maintained an ultra-loose monetary policy and clarified that higher inflation levels would likely be temporal and won’t twist its policy. Nevertheless, investors are concerned that the Fed may have to act sooner than wanted. US inflation is expected to have increased by 3.6% YoY in April

Stocks plummeted, with most global indexes ending the day in the red, while government bond yields ticked higher. The yield on the 10-year US Treasury note finished the day at 1.62%.

Meanwhile, the US Labor Department showed that local employers posted a record number of available jobs in March. Jobs openings rose 8.12 million in the month. Investors had second thoughts about the “terrible” Nonfarm Payroll report, attributing the poor numbers to companies being unable to find the workers they need, instead of blaming it on a lack of jobs.

The American dollar remained under selling pressure, ending the day with uneven losses against its major rivals. The EUR/USD pair trades around 1.2150, while GBP/USD added to recent gains and settled at 1.4150. The USD/JPY pair retested the 108.30 area bouncing just modestly ahead of the close.

Gold fell intraday but trimmed most of its losses ahead of Wall Street close, hovering around 1,837 at the end of the day. Crude oil prices started the day falling, but closed with gains, with WTI at around $ 65.30 a barrel.

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