Financial markets traded cautiously early Thursday as investors moved to the sidelines ahead of fresh macroeconomic data releases from the United States, while also monitoring developments from talks between US President Donald Trump and Chinese President Xi Jinping.
The US Dollar continued to strengthen against major peers after stronger-than-expected inflation data from the United States boosted demand for the currency.
Dollar gains after strong US producer inflation data
The US Bureau of Labor Statistics reported on Wednesday that annual producer inflation, measured by the Producer Price Index (PPI), accelerated to 6% in April from 4.3% in March.
The reading came in well above the market expectation of 4.9%.
Following the data release, the US Dollar Index posted gains for a second consecutive day before entering a consolidation phase near the 98.50 level on Thursday.
Investors are now looking ahead to another round of US economic data scheduled later in the day.
The economic calendar includes April Import Price Index and Export Price Index figures, Retail Sales data, and weekly Initial Jobless Claims numbers.
Market participants remained cautious as they assessed whether elevated producer inflation could influence the Federal Reserve’s future policy outlook.
US stock index futures traded modestly higher during the European session on Thursday, suggesting a cautious improvement in market sentiment.
Trump-Xi discussions remain in focus
Investors also continued to monitor developments surrounding discussions between Trump and Xi.
Following the initial talks, Chinese state-run news agency Xinhua reported that Trump was told mishandling the Taiwan issue could lead the two countries toward conflict and push China-US relations into “a very dangerous place.”
According to the report, the two sides are expected to discuss several geopolitical and economic matters, including the US conflict with Iran, trade relations, the Ukraine crisis, and developments on the Korean peninsula.
The headlines kept investors cautious as markets assessed the broader implications for global trade and geopolitical stability.
UK GDP beats expectations, pound steady
In the United Kingdom, data released by the UK’s Office for National Statistics showed that Gross Domestic Product rose 0.6% in the first quarter.
The reading exceeded analysts’ expectations of 0.8%.
Meanwhile, Industrial Production in March contracted by 0.2% on a monthly basis, while Manufacturing Production increased by 1.2%.
Despite the stronger GDP figures, GBP/USD showed little immediate reaction.
The currency pair was last seen trading in a narrow range above the 1.3500 level.
Yen stable as Japan considers support measures
USD/JPY remained largely unchanged near 158.00 after recording gains for three consecutive sessions on Wednesday.
Earlier in the day, Kyodo News reported that the Japanese government was considering an additional fiscal 2026 budget package aimed at easing the burden of higher oil prices on households.
The report said the proposed measures were intended to offset rising energy-related pressures.
Euro steadies, gold moves sideways
EUR/USD stabilized near 1.1700 after declining for two consecutive days.
European Central Bank Governing Council member Martins Kazaks said in an interview with public broadcaster LTV that the ECB could consider raising interest rates if higher oil prices caused inflation expectations to become unanchored.
Meanwhile, gold prices continued to move in a narrow range near $4,700 after posting modest losses in the previous session.
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