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On Wednesday, the US Dollar Index (DXY) recovers while traders’ attention shifts to the looming US inflation data. The Forex market offers no clear signs ahead of crucial inflation data from the Euro Area and the US. The US Dollar is moving between gains and losses despite risk appetite. The economic calendar for the Asian session is light and could favor more price consolidation.
Key Developments
The VIX reached its lowest finish in three weeks as the Wall Street indexes closed with significant gains. The Nasdaq increased 1.79%, while the S&P 500 gained 1.40% and recovered the 4,000 level. As banking concerns continued to diminish, the tech and banking industries increased. Investors are now concentrating on upcoming inflation data.
US bonds made little progress during a lacklustre session, with yields remaining close to recent highs. The weakest performer was the Japanese Yen, which was hurt by risk taking, higher rates, and expectations that the Bank of Japan will stick with its current course of action through the second half of the year. After a 200-pip surge, USD/JPY was last spotted getting close to 133.00.
The USD/JPY appreciation helped the US Dollar Index rise after two days, topping 102.50. The EUR/USD reached weekly highs before declining; it is currently stabilising about 1.0840. Officials from the European Central Bank (ECB) will be keenly monitoring those statistics, which might have a significant impact on the market.
GBP/USD surged above 1.2350 to its highest level in two months before reversing direction and sliding towards 1.2300. In comparison to the US dollar, the Euro and the Pound are continuing to make considerable monthly gains. The stock market’s confidence did not correspond to the typical link between commodity currencies. When the AUD and NZD decline, the Canadian dollar keeps performing well. On the third day in a row, USD/CAD fell significantly, reaching the lowest daily close in a month at 1.3560.
The Reserve Bank of Australia (RBA) might pause at its meeting the following week as a result of Australia’s lower-than-anticipated February CPI statistics (6.8% YoY vs. 7.1%). After the report, AUD/USD fell, hit a low of 0.6659 during European hours, and subsequently pared losses. The weakest commodity currency was the Kiwi. NZD/USD reached a high of 0.6270 before falling towards 0.6200, but amid worse Australian inflation, AUD/NZD swiftly rebounded from three-day lows under 1.0700 to weekly highs at 1.0747.
The positive mood on Wall Street was boosted by currencies from emerging markets. The USD/MXN exchange rate is approaching 18.00 after dropping for a fifth day in a row and hitting three-week lows. Banxico will make its monetary policy announcement on Thursday.
Gold retreated and found support in the $1,960 area, while Silver was unchanged at $23.30. On Wednesday, all significant cryptocurrencies gained. In order to regain $28,000, Bitcoin increased by almost $1,000 (or 4%). XRP grew by 4.45%.
Economic Data
On Thursday, data on German inflation will be revealed, and on Friday, data for the Eurozone. In terms of US data, the crucial inflation PCE report on Friday will be previewed by Thursday’s Jobless Claims and third estimate of Q4 GDP growth.
Also Read:
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