Dollar Gains and Gold Slips Amid Risk Appetite (19 - 23 May)

The U.S. dollar held near 100.8, heading for a 0.6% weekly gain as weak data increased Fed cut bets. The euro rebounded to $1.12 on firm inflation and ECB cut hopes. The pound hovered near $1.32 as UK jobs data raised BoE cut odds. The yen rose toward 145 despite Japan’s 0.2% GDP drop, with the BoJ staying cautious.

Gold fell to around $3,200, set for a 3% weekly loss as trade optimism trimmed safe-haven demand. Silver dropped below $32.2, pressured by easing rate cut bets but supported by a weaker dollar. Brent crude held near $65, up on trade hopes, but gains were capped by Iran supply risks and rising inventories.

U.S. 10-year yields edged higher by week’s end, with German yields also up near 2.58%, while Japan’s 10-year yield hit a six-week high of 1.45%.

U.S. Inflation

In April 2025, annual U.S. inflation slowed to 2.3%, the lowest since February 2021, slightly below expectations. Energy prices dropped 3.7%, while food and transport inflation eased. Core inflation remained at 2.8% as expected. Monthly CPI rose 0.2%, led by shelter costs.

German Inflation

Germany's inflation held at 2.1% in April, the lowest since October 2024. Energy prices dropped sharply, lowering goods inflation, though services inflation rose to 3.9%. Core inflation increased to 2.9%

UK GDP

The UK economy grew 0.7% in Q1 2025, the strongest in three quarters, beating expectations. Growth was driven by services, manufacturing, and increased investment in equipment and aircraft. Year-on-year GDP rose 1.3%.

U.S. Jobless Claims

Initial jobless claims held steady at 229,000, in line with forecasts. Continuing claims edged higher to 1.88 million. Federal employee claims dropped slightly amid ongoing job cuts.

Japan GDP

Japan’s GDP contracted 0.2% in Q1 2025, worse than expected. Exports fell while imports rebounded, and consumer spending was flat. Business investment rose 1.4%. Annualized GDP fell 0.7%.

Currencies

The U.S. dollar index held near 100.8, supported by weak economic data and Fed rate cut expectations. The euro rebounded but remains pressured by expected ECB cuts. The pound hovered near $1.32 amid weak labor data. The yen strengthened despite Japan’s economic contraction.

Commodities

Gold fell to $3,200, down over 3% for the week, as easing U.S.-China tensions reduced safe-haven demand. Silver dropped below $32.2. Brent crude hovered around $65, supported by trade optimism but capped by rising supply risks and a surprise U.S. inventory build.

Equities

U.S. stocks ended the week higher. The Nasdaq rose 6.5%, the S&P 500 gained 4.9%, and the Dow added 3%. Tech led the rally, with Nvidia surging 15%, followed by strong gains in Meta, Amazon, Microsoft, and Google.