Key Points 

• US Dollar gained ground on rising yields and conflicting statistics
• Kevin McCarthy optimistic on US debt ceiling deal
• US retail sales and industrial production increase
• Rising US Treasury yields, European yields affect currencies

What you should be aware of on Wednesday, May 17 is as follows:

On Tuesday, the US Dollar gained ground on all currencies due to rising US yields and conflicting US statistics. The Nasdaq fell by 0.18% and the Dow Jones index fell by 1%. Investor apprehension remained high. The US Dollar Index increased by 0.20 percent, peaking at 102.60.

During his discussions on the debt ceiling, Kevin McCarthy, the leading Republican in Congress, stated that "the president changed the scope of who is negotiating." In regards to a deal to stop a US default, he sounded more upbeat. 

US retail sales increased by 0.4% in April, less below the 0.7% market expectation. The March results, however, were increased from -1% to -0.7%. In April, industrial production increased by 0.5%, above the market expectation of 0%. The US will release data on building permits and housing starts on Wednesday.

Tuesday's remarks by Fed's Mester were hawkish. She stated that she wanted to reach a point where the possibility of a rise or drop in interest rates was equal. We aren't yet at that hold rate, in my opinion. On Wednesday, there will be more Fed speakers. Earlier, Fed official Barking stated that there is "no barrier in my mind to further increases" if inflation continues or picks up. 

Before modestly retracing, the US 10-year Treasury yield increased to 3.57%, its highest level in two weeks. The yield on 2-year bonds was 4.12%. Additionally rising European yields weighed on the Japanese Yen. After hitting new weekly highs over 136.60, the USD/JPY briefly declined. Preliminary Q1 GDP and March Industrial Production figures will be made public by Japan.

The EUR/USD exchange rate was rejected above 1.0900 and fell near 1.0850. Trading close to the weekly low, it keeps its bearish stance. On Wednesday, the Eurozone must release the final inflation statistics.

Because of a strong US Dollar, GBP/USD was unable to maintain its position above 1.2500 and fell. Data from the UK also had an impact on the pound. In the three months leading up to March, the ILO Unemployment Rate unexpectedly increased by 0.1%, rising from 3.8% to 3.9% and hitting its highest point in more than a year. In April, the claimant count changed unexpectedly, rising by 46.7K versus an anticipated decrease of 10.8K.

USD/CAD ended the day slightly higher, above 1.3470. Following higher-than-expected Canadian inflation numbers, the Canadian Dollar gained strength across the board. For the first time since June 2022, the annual Consumer Price Index (CPI) unexpectedly increased, reaching 4.4%.

NZD/USD made an effort to recover but fell back to 0.6258 from 0.6258. AUD/USD dropped from 0.6655 to over 0.6700. The RBA minutes, poorer Chinese data, and a greater-than-anticipated drop in the May Westpac Consumer Confidence index all contributed to the Australian Dollar's loss. Australia will present the Employment Report on Thursday and the Wage Price Index on Wednesday.

The price of gold plunged sharply below $2,000, continuing to be under pressure and possibly approaching the key support level of $1,970. Silver lost ground as well, dropping to $23.60. Some of Monday's gains in crude oil prices were reversed, with WTI closing at roughly $70.55. Losses were also seen in cryptocurrencies, with BTC/USD sliding by 1.40% below $27,000.