The euro strengthened against the dollar climbing to its highest level in a month close to 1.08. On Tuesday, annual euro zone CPI figures soared by 8.1% in May vs. the previous reading of 7.4%. Expectations of the normalization of monetary policy in the eurozone in the second half of this year continued to push the euro higher.
The British pound slightly rose against the dollar. Bank of England Governor Andrew Bailey said that they are prepared to raise the policy rate again if needed but acknowledged that tightening must take income shock into account.
The Japanese yen weakened as US bond yields rose on Monday and Tuesday. Overall, the dollar fell but recovered some losses on Tuesday after one policy member expressed support for a rate hike in September.
Gold prices traded in a narrow range around the level of 1850. Worries of the Economic slowdown worries and speculation on aggressive monetary policy of major central banks alternated providing limits to gold price moves in both directions.
All major US stock indexes rose strongly as some investors took the opportunity to buy discounted stocks. The question remains if the recent bounce was just a bear market rally or whether stock markets are entering into a meaningful consolidation.
Oil prices rose last week. The European Union leaders agreed in principle to cut the EU Russian oil imports by 90% by year’s-end, stepping up pressure on Russia over its invasion of Ukraine. Russia cut gas deliveries to Denmark and the Netherlands as these two countries refused to pay their bills in rubles. With the beginning of the main holiday or driving season, which starts in the U.S. and Europe, fuel demand will rise providing support for oil and derivatives.