The recent data on United States API weekly crude oil stock showed an increase of 2.499 million barrels. This figure exceeded the projected decrease of 1.85 million barrels, reported on 16th May.

AUD/USD made gains towards 0.6450 due to reduced US Dollar demand amid trade tensions with China. USD/JPY also fell below 144.00 as the US Dollar continued its decline influenced by expected Federal Reserve rate cuts.

Gold Prices On The Rise

Gold prices are on the rise, aiming to stay above $3,300 as geopolitical tensions and a weaker US Dollar bolster demand. The UK is expected to announce a rise in CPI inflation to 1.1% monthly, and 3.3% annually.

China’s economy experienced a slowdown in April, influenced by trade war uncertainties. Retail sales and fixed-asset investment did not meet forecasts; however, manufacturing was less affected than anticipated.

The recent American Petroleum Institute (API) data, which indicated a build of 2.499 million barrels in oil inventories, was unexpected. Markets had priced in a drawdown of around 1.85 million barrels. Naturally, this larger-than-anticipated stockpile hints at softer demand or a potential shift in supply dynamics. For those trading energy-linked contracts or related volatility products, it shifts the bias slightly towards bearish short-term sentiment, at least until the EIA figures offer confirmation. Awareness of backwardation or contango in the futures curve might be particularly useful over the next several sessions, especially with OPEC+ decisions looming.

On currency moves, AUD/USD’s climb towards the 0.6450 level was largely underpinned by lower interest in the US Dollar, driven by the widening tensions with China. A rally in the Aussie, especially tied to risk-on moods, often requires macroeconomic stability out of Asia — yet with Chinese activity figures weakening, this pairing could become more data-sensitive from both ends. It may be prudent to look closely at the next Employment and CPI prints out of Australia, as changes there could counteract broader USD weakness.

Currency Moves And Inflation

USD/JPY’s slip below 144.00 reflects deepening expectations of the Federal Reserve adopting a less aggressive stance. The Dollar’s broad retreat combined with a rate cut narrative is leaving little room for the Yen to weaken further without support from local policy makers. Traders closely watching yields will likely keep an eye on US 2-year Treasuries and implied volatility in FX options in this cross. If Bank of Japan officials hint at policy normalisation, even subtly, the pair may see sharper moves than usual in either direction.

Gold continues to benefit from the prevailing climate. With prices climbing and staying firm above the $3,300 level, safe haven flows are unmistakably being driven by both geopolitical risks and broad-based Dollar softness. In our experience, aggressive rallies during a weakening Dollar regime often face limited resistance if inflation expectations remain tethered. Watching real yields, especially in the 10-year inflation-protected securities, allows us to assess how attractive gold remains when adjusted for opportunity cost.

In the UK, inflation’s reacceleration to 1.1% month-on-month and 3.3% annually demands attention. These levels appear higher than earlier forecasts and may pressure the Bank of England into a cautious stance. Those managing risk exposure in sterling pairs or contracts linked to UK rates could consider recalibrating positions ahead of the next monetary policy report. Forward guidance may become more hawkish, especially if wage data turns sticky.

China’s mixed macro print last month, where retail sales and investment showed softness while manufacturing held up better than expected, sends a complicated message. There’s no denying that trade-related tensions are leaving their mark, especially on the domestic consumption side. For those tracking commodity-linked currencies or industrial metals, slower Chinese consumer activity may imply lagging demand, while relative stability in factory output still supports selective asset classes. Watching policy responses from Beijing becomes imperative, especially as past stimulus announcements have a track record of moving markets quickly.

We think these data points, taken together, reinforce the notion that while rate and macro adjustments are underway globally, the path is anything but smooth. Careful allocation, tighter stops, and shorter positioning windows may serve well in this environment.

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