US Dollar consolidates gains ahead of key data releases

Supported by the FOMC Minutes, the US Dollar Index registered gains for the second straight day on Wednesday but started to edge lower early Thursday amid improving market mood. The US Bureau of Economic Analysis will release its second estimate of the fourth-quarter Gross Domestic Product (GDP) growth later in the day. The US economic docket will also feature the weekly Initial Jobless Claims and the Chicago Fed’s National Activity Index. Eurostat will publish its revisions to January inflation figures.

The minutes of the FOMC’s first policy meeting of the year revealed that all policymakers agreed more rate hikes will be needed to achieve inflation objectives. The publication also acknowledged that a “few participants” favoured raising rates by 50 basis points but didn’t offer any details regarding these discussions. In turn, the benchmark 10-year US Treasury bond yield recovered modestly from daily lows but ended up closing in negative territory. Meanwhile, Wall Street’s main indexes ended the day mixed.

In the early European morning, US stock index futures are up between 0.3% and 0.9%, pointing to a positive shift in risk sentiment. The 10-year yield holds steady above 3.9% and the US Dollar Index is down modestly at around 104.30.

While testifying on policy, Reserve Bank of New Zealand Governor Adrian Orr said that core inflation is still too high and that expectations are elevated. “Monetary conditions need to tighten further,” Orr added and NZD/USD gained traction during the Asian trading hours. As of writing, the pair was up 0.5% on the day at 0.6250.

EUR/USD extended its slide on Wednesday and touched its lowest level since early January at 1.0600 before staging a modest rebound early Thursday. Citing diplomats, Reuters reported on Wednesday that European Union countries have not reached an agreement about the new sanction package against Russia. Members will have more talks on Thursday.

GBP/USD erased a large portion of the PMI-inspired gains it recorded on Tuesday but managed to hold comfortably above 1.2000. The pair clings to modest recovery gains early Thursday while staying below 1.2100.

USD/JPY failed to stabilize above 135.00 and closed modestly lower on Wednesday. The pair continues to trade in a tight channel below that level in the European morning.

Gold price continued to stretch lower despite retreating US Treasury bond yield and closed below $1,830 for the first time since early January. XAU/USD, however, staged a correction during the Asian trading hours and was last seen trading slightly above $1,830.

Bitcoin lost more than 1% on Wednesday after having failed to stabilize above $25,000. BTC/USD edges higher early Thursday and trades near $24,400. Following a two-day slide, Ethereum rises toward $1,700 and is up more than 1% on the day.

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