The US Dollar is holding steady early Wednesday, as investors gear up for key macroeconomic events that could significantly impact the currency’s valuation.
The Bureau of Labor Statistic will release the Consumer Price Index data for May in early U.S. trading. Later in the day, the Federal Reserve will announce monetary policy decisions and publish the revised Summary of Economic Projections (SEP), the so-called dot plot.
The action in foreign exchange markets remained choppy in the absence of high-tier data releases on Tuesday. Although the DXY Dollar Index registered daily gains, it struggled to gather bullish momentum, while the benchmark 10-year US Treasury bond yield lost more than 2% and Wall Street’s main indexes ended the day mixed.
The annual CPI is forecast to rise 3.4% in May, matching April’s increase. On a monthly basis, the CPI and the core CPI, which excludes volatile food and energy prices, is expected to increase 0.1% and 0.3%, respectively.
Later in the day, the Fed is set to leave the policy rate unchanged at 5.25-5.5% range and investors will pay close attention to macroeconomic projections, especially the interest rate.
China CPI drops 0.1%
The data from China showed earlier in the day that the CPI declined 0.1% on a monthly basis, while the annual CPI rose 0.3%. After closing the day virtually unchanged on Tuesday, AUDUSD edged higher in Asian trading on Wednesday and was last seen trading slightly above 0.6600.
USDJPY extended its sideways grind above 157.00 early Wednesday after failing to make a decisive move in either direction on Tuesday. The Producer Price Index in Japan rose 0.7% on a monthly basis in May, surpassing the market expectation for an increase of 0.4%.
The UK’s Office for National Statistics reported that the UK economy stagnated in April, with the monthly real Gross Domestic Product arriving at 0%. In the same period, Industrial Production contracted by 0.9% and Manufacturing Production decreased by 1.4%.
The GBPUSD pair largely ignored these readings and was last seen fluctuating slightly below 1.2750.
EURUSD remained under bearish pressure on Tuesday and registered its lowest daily close in over a month below 1.0750. The pair struggles to stage a rebound and continues to trade below 1.0750 in European trading on Wednesday.
After finding support near $2,300, Gold recovered modestly and registered small gains on Monday and Tuesday. XAUUSD remains relatively quiet early Wednesday and fluctuates above $2,310.
(Source: OANDA)
