Nickel prices rose on Wednesday even as the dollar gained ground against most major rivals following inflation data.

Earlier US government data showed yearly inflation accelerated more than expected in March, which could delay the timeline of interest rate cuts this year. 

US consumer prices rose 3.5% y/y in March, above estimates of 3.4%.

On a monthly basis, consumer prices rose 0.4%, while analysts expected a rise of 0.3%. 

Nickel prices have found recent support due to a bright outlook for global demand on industrial metals with corresponding weakening nickel supplies. 

Nickel has long suffered from an oversupply problem that pressured the prices for the past few years, however experts now expect a swing to deficit by 2028. 

Otherwise, the dollar index rose 0.8% as of 14:45 GMT to 105.05, with a session-high at 105.1, and a low at 104.02. 

Nickel spot prices rose 2.3% as of 14:57 GMT to $18.191 thousand a tonne.

Nickel is used extensively in steel manufacturing, and has promising applications in EV batteries. 

Global oil prices rose in European trade on Wednesday for the first time in four days, with Brent trading above $90 once more amid mounting tensions between Iran and Israel.

The gains are curbed however by the dollar's recent surge, and the unexpected large US inventory buildup last week.

Prices 

US crude rose 0.65% to $85.86 a barrel, while Brent added 0.6% to $90.05 a barrel. 

US crude lost 1.4% yesterday while Brent shed 1.15% amid active profit-taking off six-month highs. 

Iran-Israel Tensions 

The Israeli government warned that if Iran attacked Israel, the Israeli army would respond with an attack on Iranian territory. 

Iran’s supreme leader Khamenei threatened to punish Israel, after accusing it of striking the Iranian consulate in Syria last week, killing 7 military officials. 

The mounting Israel-Iran tensions threaten a potential widening of the war between the two sides in the region, which could threaten supplies. 

The Dollar

The dollar index rose 0.75% on Wednesday against a basket of major rivals.

The gains came as markets now only expect two Federal Reserve rate cuts this year due to strong US inflation and labor data. 

US Stocks

Initial data from the American Petroleum Institute reported a buildup of 3 million barrels in US crude stocks last week, above estimates of 2.4 million. 

According to the data, total US stocks are now up to 461.1 million barrels, the highest since mid-2023, and a negative sign for demand in the US.

 Now traders await official data from the EIA later today, expected to show a buildup of 0.9 million barrels last week. 

Oil Prices Outlook 

Goldman Sachs’ analysts expect Brent to remain below $100 a barrel, provided no new surprising geopolitical hits take place. 

US consumer prices rose 3.5% y/y in March, above estimates of 3.4%, and up from 3.2% in the previous reading.

Core prices, excluding food and energy, rose 3.8% y/y, above estimates of 3.7%. 

The dollar fell in European trade on Wednesday against a basket of major rivals, extending losses for the third straight session and almost touching three-week lows as US 10-year treasury yields slowed down. 

The decline comes ahead of the crucial US inflation data for March and the release of the Federal Reserve’s last meeting’s minutes, which could provide clues on the future of US interest rates this year.

The Price 

The dollar index fell 0.1% to 104.03 today with a session-high at 104.16.

The Index closed Tuesday down 0.1%, the second loss in a row, marking a three-week trough at 103.88. 

US Yields 

US 10-year treasury yields fell 0.5% on Wednesday away from five-month highs at 4.462%, pressuring the dollar. 

US Rates

The odds of a 0.25% Fed interest rate cut at the June policy meeting currently stand at 56%.

Traders expect two interest rate cuts totaling 50 basis points overall this week, down from 75 basis points in previous forecasts. 

US Inflation

Now investors await crucial US inflation data later today, which could change the odds of future policy moves by the Fed. 

US consumer prices are expected up 3.4% y/y in March, up from 3.2% in February, while core prices are up 3.7%. 

The Fed 

The Federal Reserve will release the minutes of its last meeting later today, at which it held interest rates unchanged at below 5.5%. 

The Fed back then said rushing to cut interest rates isn’t appropriate until there’s enough confidence that inflation is sustainably moving towards 2%. 

 Fed Chair Jerome Powell said back then that if the US economy continued to perform as expected, leaving restrictive policies could be appropriate this year. 

The Fed expects interest rates to reach 4.75% this year, and 4% in 2025, and 3.25% in 2026.