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Another round of bearish Dollar action after the latest U.S. inflation data, prompting gains in risk-on assets and most of the other major currencies.

Notable News & Economic Updates:

FDA halts use of Johnson & Johnson Covid vaccine due to rare blood-clotting issues in six women

China’s trade surges as global economy recovers from pandemic

U.S. consumer prices post biggest gain in 8-1/2 years as economy reopens

Oil climbs 5% on signs of increasing crude demand

Dogecoin spikes 400% in a week, stoking fears of a cryptocurrency bubble

Bitcoin tumbles after Turkey bans crypto payments citing risks

S&P 500 edges higher to another all-time high, on pace for 4th straight positive week

Treasury yields rebound but still below recent highs

Chinese economy grew 18.3% q/y as expected in Q1 2021

Dollar Falls as Inflation Doesn’t Meet the Hype

Dollar, Gold, S&P 500, 10-yr Treasury Yield, Bitcoin, Oil
Dollar, Gold, S&P 500, 10-yr Treasury Yield, Bitcoin, Oil

Looking across the asset classes, it looks like a risk-on kinda week for traders as cryptos, oil, and equities trend higher, while the Dollar and Treasury yields fell. The main driver may have been the dip in U.S. Treasury yields this week, which were likely reacting to the latest U.S. inflation data on Tuesday.

The U.S. inflation latest read didn’t far exceed the high expectations built on the massive government stimulus and monetary easing moves over the past year, coming in at just a tick higher than expectations at 0.6% m/m.

Apparently, this wasn’t enough to spark speculation of a Fed tightening move sooner rather than later, which is likely why we saw the dip in Treasury yields and the U.S. dollar as traders took a step back from that paradigm.

And without any other major catalysts to attribute to this week, this dynamic was the likely catalyst for the outperformance in the equity, crypto, and commodity markets through the latter half of the week.

Besides U.S. Dollar weakness, oil’s dominant run higher against the other asset classes likely got a boost from a fall in oil inventories, indicating that oil demand continues to rise from the severely depressed levels thanks to the coronavirus pandemic last year.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart

There were no catalysts or headlines from Switzerland, and given that broad risk sentiment leaned positive this week, it’s no surprise the Swiss franc was a net loser through out most of the week, especially against the comdolls.

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart
Overlay of CAD Pairs: 1-Hour Forex Chart

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart
Overlay of AUD Pairs: 1-Hour Forex Chart

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Overlay of Inverted JPY Pairs: 1-Hour Forex Chart