United States Redbook Index (YoY) climbed from previous 7.8% to 9.6% in May 8

Gold (XAU/USD) trades under pressure on Tuesday as fading hopes for a near-term breakthrough in US-Iran negotiations and hotter-than-expected US inflation data support the US Dollar (USD).

GBP/USD declines around 1.3525 on Tuesday at the time of writing, down 0.62% on the day, as the US Dollar (USD) benefits from renewed demand following stronger-than-expected US inflation data and a more cautious market mood.

Indian Prime Minister Narendra Modi urged the nation’s citizens to avoid buying Gold for a year, in an effort to cut spending and save foreign exchange as the country grapples with the macroeconomic consequences of the Iran war. 

The United States (US) reported that annualized inflation, as measured by the Consumer Price Index (CPI) rose by 3.8% in the twelve months to April, higher than the 3.3% posted in March and above expectations of 3.7%.

TD Securities’ FX strategists see the Euro (EUR) relatively strong on crosses, particularly versus the Pound (GBP) and Canadian Dollar (CAD).

Annual inflation in the United States (US), as measured by the change in the Consumer Price Index (CPI), climbed to 3.8% in April from 3.3% in March, the US Bureau of Labor Statistics (BLS) reported on Tuesday. This print surpassed the market expectation of 3.7%.

United States Consumer Price Index Core s.a up to 335.423 in April from previous 334.165

United States Consumer Price Index ex Food & Energy (MoM) above expectations (0.3%) in April: Actual (0.4%)

United States Consumer Price Index ex Food & Energy (YoY) above forecasts (2.7%) in April: Actual (2.8%)

United States Consumer Price Index n.s.a (MoM) rose from previous 330.21 to 333.02 in April

United States Consumer Price Index (YoY) above forecasts (3.7%) in April: Actual (3.8%)

United States Consumer Price Index (MoM) in line with forecasts (0.6%) in April

MUFG’s Lee Hardman notes that the US Dollar’s (USD) rebound alongside higher Oil prices has lifted USD/JPY back towards 158.00, close to levels seen before suspected Japanese intervention.

Private-sector hiring in the US has added extra momentum in late April. According to the NER Pulse, the weekly companion to the ADP National Employment Report, companies added an average of 33K jobs per week in the four weeks ending April 25.

The Euro (EUR) heads lower against the Dollar (USD) on Tuesday, trading right below 1.1750 at the time of writing, after another rejection at the 1.1790 area on Monday.

United States ADP Employment Change 4-week average fell from previous 39.25K to 33K in April 18

United States ADP Employment Change 4-week average dipped from previous 39.25K to 30.25K in April 18

United States ADP Employment Change 4-week average: 33K (April 18) vs previous 39.25K

EUR/GBP holds firm on Tuesday after hitting a three-week high of 0.8697 earlier in the day, as traders assess rising political instability in the United Kingdom (UK) and stalled US-Iran negotiations. At the time of writing, the cross is trading around 0.8679, up roughly 0.25%

ING’s Francesco Pesole highlights rising political uncertainty in the United Kingdom (UK) as calls grow for Prime Minister Keir Starmer’s resignation, with betting markets seeing a high chance he leaves office this year.

Brazil IPCA Inflation below forecasts (0.7%) in April: Actual (0.67%)

Mexico Industrial Output (YoY) came in at -1.3%, above forecasts (-1.5%) in March

BNY’s Bob Savage reports India is considering emergency steps to protect foreign exchange reserves as higher Oil prices widen the current account deficit. Measures under discussion include fuel price hikes, import restrictions on Gold and electronics, and tighter hedging rules.

The Canadian Dollar (CAD) accelerates its decline against the  US Dollar (USD) on Tuesday, with the USD/CAD pair rallying above 1.3700 and set to test its highest levels in nearly a month, at 1.3714.

Commerzbank strategists highlight concerns from India’s jewellery industry about a potential further setback in Indian Gold jewellery demand, which is important for the physical Gold market.

The USD/JPY pair trades 0.26% higher to near 157.60 during the European trading session on Tuesday. The pair gains as the US Dollar (USD) outperforms its peers due to renewed tensions between the United States (US) and Iran.

Brown Brothers Harriman’s (BBH) Elias Haddad notes that the US Dollar (USD) is firmer as confidence in a swift reopening of the Strait of Hormuz fades, with USD outperforming most major currencies.

Gold (XAU/USD) shows moderate losses on Tuesday, trading a few pips below the $4,700 level at the time of writing after failing to find acceptance above $4,770 earlier on the day.

Brown Brothers Harriman (BBH) Elias Haddad notes that USD/JPY has rebounded toward 157.75 after testing 155.00, with 160.00 described as a key line in the sand.