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The US Dollar (USD) faced pressure on Tuesday, marking its lowest daily close in two weeks near 104.00 on the USD Index. As market attention turned towards the upcoming release of the Federal Open Market Committee (FOMC Minutes), the currency struggled to stage a rebound early Wednesday. Additionally, several Federal Reserve (Fed) policymakers are scheduled to deliver speeches later in the day. Meanwhile, the European Commission is set to release preliminary Consumer Confidence data for February.
USD Performance and Market Focus on FOMC Minutes
The USD struggles to rebound as attention turns to the upcoming FOMC Minutes release. Additionally, several Federal Reserve policymakers are scheduled to speak, adding to market anticipation. The benchmark 10-year US Treasury bond yield’s decline further weighs on the USD, while US stock index futures trade marginally lower, reflecting the cautious sentiment.
USD/CAD Gains Amid Soft Canadian Inflation Data
Despite broad-based USD weakness, USD/CAD saw gains and closed above 1.3500 on Wednesday. This was attributed to soft inflation data from Canada, which hindered the Canadian Dollar’s resilience against its rivals. The Consumer Price Index (CPI) for January rose by 2.4% on a yearly basis, down from December’s 3.4% and below the market expectation of 3.3%.
Read more: Will Canadian CPI Data Offer The Loonie Any Support?
AUD/USD Performance
Australian data revealed that the Wage Price Index rose by 0.9% quarterly in the fourth quarter, aligning with analysts’ estimates. After five consecutive days of gains, AUD/USD continued its upward trend on Wednesday, trading above 0.6550.
Japan’s Imports and USD/JPY Performance
Japan reported a 9.6% decline in imports on a yearly basis in January, with no immediate reaction observed in USD/JPY. The pair maintained a sideways grind around 150.00 during the Asian session.
GBP/USD Performance
GBP/USD climbed above 1.2650 during European trading hours on Tuesday but retraced some gains later in the day, fluctuating around 1.2620.
EUR/USD Performance
EUR/USD benefited from USD weakness, advancing above 1.0800 on Tuesday and holding steady above this level in early European trading on Wednesday.
Gold Prices and Yield Dynamics
Gold continues its ascent amid falling yields, trading modestly higher at around $2,030. This suggests investors’ preference for safe-haven assets amidst uncertain market conditions.
Conclusion
The USD faced challenges ahead of the release of FOMC Minutes, with the currency struggling to stage a rebound amidst softening Treasury yields. While various currency pairs reacted differently to global economic developments, the broader market sentiment remained cautious as investors awaited further insights from Fed policymakers and economic data releases.
