Dollar recovers, oil jumps, gold retreats ahead of further Fed speeches

The US dollar has been gaining ground following upbeat US data and despite dovish Fed comments. Oil is benefiting from talk of higher demand, the Aussie is shaken by lockdown news and gold slips under $1,900.

The tug-of-war between upbeat US data and the Federal Reserve’s dovishness continues. The ISM Manufacturing Purchasing Managers’ Index beat estimates with 61.2 and its inflation component remained elevated at 88 points. Businesses surveyed noted rising prices and shortages – yet Fed Governor Randal Quarles said he does not think the bank should use its tools to counter supply chain issues.

The dollar dropped on Tuesday before recovering on Wednesday despite additional dovishness from the Fed’s Lael Brainard, who reiterated the message that the economy still has a long way to go.

Gold has slipped below $1,900 after hovering above that level for several days – shrugging off a minor drop in US Treasury yields.

Fed officials Raphael Bostic and Charles Evans are due to speak later in the day and the institution also releases its Beige Book.

GBP/USD is hovering around 1.4150, off the highs, and despite the UK reporting a day without COVID-19 deaths. Britain is set to fully reopen on June 21, but the spread of virus variants poses a risk.

EUR/USD is clinging to the 1.22 area after an upward move on Tuesday. Jens Weidmann, President of the German central bank, is set to speak later in the day.

AUD/USD is trading around 0.7750, unable to benefit from an increase of 1.8% in first-quarter Gross Domestic Product, a figure that beat estimates. Melbourne will be put on a seven-day lockdown following a new coronavirus cluster.

Oil: Saudi Arabian officials said that they are satisfied with rising demand, pushing WTI Crude Oil to around $68. Nuclear talks with Iran continue in Vienna and that nation’s return to the global oil market may still weigh on prices.

Cryptocurrencies have been consolidating in range, with Bitcoin trading at the $36,000 handle and Ethereum above $2,600. Dogecoin has been whipsawed in a move potentially related to a report that the US SEC is investigating Tesla founder Elon Musk for unauthorized tweets. Earlier, the canine-themed digital assets jumped in response to Coinbase’s announcement that it would list Doge.

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