US inflation data to reinject volatility into markets

Markets stay relatively quiet early Wednesday as investors move to the sidelines while waiting for the high-tier events that are likely to ramp up volatility. The US Bureau of Labor Statistics will publish March Consumer Price Index (CPI) data, the Bank of Canada (BOC) will announce its interest rate decision and the US Federal Reserve will release the minutes of its March policy meeting.

The US Dollar struggled to stay resilient against its rivals on Tuesday as markets refrained from betting on a 25 basis points Fed rate hike before seeing inflation figures for March. Meanwhile, Wall Street’s main indexes closed mixed. Early Wednesday, US stock index futures trade flat, reflecting a cautious market stance. On Tuesday, Federal Reserve (Fed) Bank of New York President John Williams said that one more rate hike would a reasonable starting place but acknowledged that they will have to lower rates if underlying inflation comes down.

EUR/USD took advantage of the broad-based US Dollar weakness and erased all of Monday’s losses on Tuesday. Early Wednesday, the pair trades in a relatively tight range above 1.0900.

GBP/USD snapped a four-day losing streak on Tuesday and closed the day above 1.2400. Although the pair rose toward 1.2450 in the early Asian session on Wednesday, it lost its bullish momentum and retreated to the 1.2420 area in the European morning.

USD/CAD came under bearish pressure on Tuesday and lost nearly 50 pips amid the US Dollar weakness and rising crude oil prices. The pair trades near 1.3450 early Wednesday. The BOC is widely expected to leave its policy rate unchanged at 4.5%. BOC Governor Tiff Macklem will comment on the policy outlook and respond to questions in a post-meeting press conference.

AUD/USD is having a difficult time making a decisive move in either direction and moving up and down in a narrow range below 0.6700 mid-week. In the early Asian session on Thursday, March jobs data from Australia will be watched closely by market participants.

Following Monday’s sharp upsurge, USD/JPY stayed in a consolidation phase on Tuesday and closed virtually unchanged. The pair extends its sideways grind slightly above 133.50 on Wednesday. The data from Japan showed that Machine Orders contracted by 4.5% on a monthly basis in February.

Gold price has gathered bullish momentum and reclaimed $2,000 on Tuesday. Early Wednesday, XAU/USD continues to push higher and was last seen trading in positive territory above $2,010.

Bitcoin extended its rally and touched a fresh multi-month high $30,585 on Tuesday before staging a technical correction. At the time of press, BTC/USD was down nearly 1% on the day at $29,900. Ethereum lost 1% on Tuesday and broke below $1,900 on Wednesday. ETH/USD was last seen losing 1.3% on a daily basis at $1,865.

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