Commerzbank analysts note the US Dollar Index (DXY) inched up to 97.96 as markets consolidated and prepared for United States (US) Consumer Price Index (CPI). US equities posted modest gains, while US Treasury yields rose 5–7bp on higher Oil prices and fading hopes of a near-term US–Iran peace deal. The bank notes consensus expects a pickup in headline and core CPI.

US data and geopolitics underpin Dollar

"US equity markets posted modest gains, aided by the tech sector, and despite fading hopes of a near-term peace agreement between the US and Iran. US bond yields rose by 5-7bp across the curve due to higher oil prices. The Dollar Index rose slightly as investors prepared for the key inflation data today."

"The US Treasury market has largely priced out the odds of Fed rate cuts this year. Yields on the 10-year note climbed as the market prepared for the consumer price index (CPI) report, which will gauge the war's impact on inflation."

"For today, we have ADP weekly employment change and CPI for April. The market consensus for CPI is 3.7% yoy vs 3.3% previously, and the core CPI is expected to rise 2.7% vs 2.6% previously."

"President Trump also voiced support for a gasoline tax holiday to ease costs for domestic consumers as he prepares to meet President Xi Jinping in Beijing on 13 -15 May."

"The summit is expected to touch upon the Middle East conflict, with Trump expected to press Xi on China's oil purchases from Iran and push for Beijing's leverage to reopen the Strait of Hormuz. Key points to watch also include efforts to maintain their fragile trade truce, the potential establishment of a bilateral "Board of Trade" to manage commercial relations, and sensitive discussions surrounding AI safety and Taiwan."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)