Market Drivers – US Session, March 12

After US inflation data came in higher than anticipated, the dollar maintained its good start to the week, supporting investors’ further repricing of a Federal Reserve rate cut in June.

As confidence in the Fed’s summer easing cycle increased, the USD Index recovered the territory above the 103.00 mark. A light US docket with simply the weekly MBA Mortgage Applications was released on March 13.

The EUR/USD pair dropped to retest the area around 1.0900, where some respectable competition seems to have surfaced. On March 13, the numbers on Industrial Production for the entire European Union are scheduled.

Further weakness, driven by a stronger dollar, pushed the GBP/USD pair to touch the mid-1.2700s.

The Japanese yen’s renewed fall, along with dwindling expectations that the Bank of Japan would abandon its accommodating monetary policy stance at its meeting next week, caused the USD/JPY pair to momentarily break over the 148.00 mark and end many sessions of losses.

AUD/USD corrected further down and breached the 0.6600 support on the back of the stronger Greenback and the weak performance of iron ore.

As traders continued to evaluate the geopolitical issue, an optimistic tone from OPEC’s monthly report, and the impending EIA data on crude oil stocks, prices of WTI fluctuated between gains and losses around the $78.00 mark.

Gold prices declined to around $2,150 per troy ounce, capping a nine-session winning run, due to additional strengthening of the US dollar and further increases in overall US yields. Following suit, silver prices saw significant losses at the end of Tuesday’s trading session after failing to advance towards a three-month high of about $24.70 per ounce.

What to watch on Wednesday

Wednesday will witness UK data on GDP, construction output, goods trade balance, industrial production, and manufacturing production.