Dollar rally loses steam ahead of key data releases

Following Tuesday impressive rally, the US Dollar Index (DXY) closed flat on Wednesday and edged slightly lower early Thursday. Investors seem to have moved to the sidelines ahead of Friday’s eagerly-awaited February jobs report from the US. Later in the session, weekly Initial Jobless Claims will be featured in the US economic docket.

On the second day of his semi-annual testimony, FOMC Chairman Jerome Powell said that they have not yet made any decisions about the March policy meeting and reminded that they are data-dependent. Meanwhile, the data from the US showed that employment in the private sector increased by 242,000 in February. Nevertheless, the DXY spent the day moving up and down in a narrow channel and the benchmark 10-year US Treasury bond yield registered small gains on Wednesday. Wall Street’s main indexes closed mixed after having suffered heavy losses on Tuesday.

Following its March policy meeting, the Bank of Canada (BoC) announced left its benchmark interest rate unchanged at 4.5% as expected. In its policy statement, the BoC repeated that it intends to hold the rate at this level, “conditional on the economy developing broadly in line with its forecasts.” USD/CAD continued to push higher and touched its strongest level since October at 1.3817 before retreating to the 1.3800 area early Thursday.

USD/JPY turned south during the Asian trading hours on Thursday and broke below 137.00. The data from Japan showed that the real Gross Domestic Product (GDP) grew at an annualized rate of 0.1% in the fourth quarter, missing the market expectation of 0.8% by a wide margin. On Friday, the Bank of Japan will announce its monetary policy decisions at the last policy meeting led by Governor Haruhiko Kuroda.

EUR/USD failed to make a decisive move in either direction on Wednesday. The pair continues to move up and down in a narrow channel at around 1.0550 in the European morning on Thursday.

GBP/USD registered small daily gains on Wednesday and edged slightly higher toward 1.1850 early Thursday. The UK’s Office for National Statistics will release the GDP, Industrial Production and Trade Balance data for January on Friday.

Gold price managed to hold above $1,810 on Wednesday as the US Treasury bond yields held steady. Early Thursday, the benchmark 10-year US T-bond yield is testing 4%, not allowing XAU/USD to gain traction.

Bitcoin extended its weekly slide and lost nearly 3% on the day, touching its lowest level since mid-February near $21,500. BTC/USD stays relatively quiet in the European morning and fluctuates at around $21,700. Ethereum continued to push lower and came within a touching distance of $1,500 on Wednesday before recovering modestly on Thursday. ETH/USD was last seen rising 0.5% on the day at $1,540.

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