The euro strengthened against the dollar after CPI data showed the pickup in US inflation is not something that can be ignored nor is it exaggerated. This means the US Federal Reserve will keep its rate at close to zero for a long period, at least until the end of 2023. The accelerated vaccination campaign in Europe is also very supportive for the euro.
The British pound rose strongly last week. A gradual reopening of the economy and promising data from the UK labor market on Tuesday, pushed the GBP/USD currency pair to the 1.40 level.
The Japanese yen continued to strengthen as the interest rate differential between the US and Japanese bonds narrowed further. Overall, the dollar index dropped below 91 points but consolidated on Tuesday.
Falling bond yields and US sanctions against Russia helped the yellow metal recover, and at one point traded close to the $1,800 level. However, a rebound in US Treasury yields reversed gold prices on Monday and Tuesday.
US indexes eased after S&P 500 and Dow Jones hit all-time highs on Friday. Investors are reluctant to snap up stocks at high valuations. However, the earnings season is in full swing with AT&T, Intel and American Airlines ready to report on Thursday.
Oil prices rose last week supported by the weakening dollar and improved prospects of the European health situation. A halt to crude exports from a Libyan port also helped in pushing prices higher on Tuesday. However, coronavirus infections continue rising in India, the third largest oil consumer in the world, which is limiting the upside potential.