US DOLLAR SPIKES AS CONSUMER INFLATION SURGES TO 1981 HIGH

European equities declined on Friday as investors continued focusing on Thursday’s interest rate decision by the ECB. The Stoxx 600 index declined by more than 1.14%. Similarly, other indices like the German DAX, CAC 40, and AEX declined by more than 1%. The main concern is that the ECB committed to start hiking interest rates in the coming month and exit negative rates in September. As a result, Europe’s bond yields rose, with Greece’s 10-year rising to 4.37%. In Italy, the 10-year rose to 3.7% while the German bund yield fell to 1.42%.

The US dollar index spikes after the latest consumer price index (CPI) data. According to the Bureau of Labor Statistics, the country’s headline CPI rose to 8.6% on a year-on-year basis. This was the highest point since 1981. On a monthly basis, inflation rose from 0.3% in April to 1.0%. Meanwhile, excluding the volatile food and energy prices, inflation declined from 6.2% to 6.0%. These numbers came as gasoline prices hit an average $5 in the country. Analysts believe that inflation will remain at elevated levels in the coming months. US bond yields rose slightly after the inflation numbers while futures tied to the Dow Jones declined by 50 points.

The Canadian dollar eased slightly after the latest Canada jobs data. According to the country’s statistics agency, the economy added 39.8k jobs in May after it added 15k in the previous month. At the same time, the unemployment rate declined slightly in May to 5.1%. These numbers come at a time when the Bank of Canada (BOC) has embraced a more hawkish policy. The bank has delivered several rate hikes and has signaled that the tightening phase will continue. The Canadian dollar also declined slightly as the price of crude oil and natural gas surged.

EURUSD

The EURUSD pair continued its bearish trend as investors continued focusing on the ECB decision. It fell to a low of 1.0550, which was the lowest level since May 25th. It managed to cross the ascending trendline shown in red. It also declined to the 38.2% Fibonacci retracement level. Also, the pair has dropped below the 25-day and 50-day moving averages while the Relative Strength Index has dropped to the oversold level. The pair will likely continue falling in the near term.

USDCHF

The USDCHF pair continued rising after the US inflation data. It rose to a high of 0.9831, which was the highest point since May 23rd. The pair has risen above the 25-day and 50-day moving averages. The MACD has moved above the neutral level while the Relative Strength Index has moved below the overbought level. The pair will likely keep rising as bulls target the key resistance level at 0.99880.

XAUUSD

The XAUUSD pair crashed hard after the latest US inflation data. It fell to a low of 1,825, which was the lowest level since May 19th. On the four-hour chart, the pair moved below the lower side of the Bollinger Bands. It also fell below the 25-day moving average while the Stochastic Oscillator and the Relative Strength Index have moved lower. The pair will likely continue falling.