Dollar on the back foot after weak U.S. data, UK inflation in Focus

Forex today in Asia witnessed risk-off market profile for the second day in a row, as the Asian stocks tracked the heavy losses in their Wall Street counterparts. Amid risk-aversion the Yen recovered ground and dragged the USD/JPY pair back to the 112.50 level. The rest of the majors stuck to tight trading ranges amid a broadly subdued US dollar while markets await fresh updates around the European politics for further trading impetus. The dollar was flat as comments by New York Fed President John Williams received some focus as he said the Federal Reserve “will be likely raising interest rates somewhat.”

The EUR economic calendar remains data-light for the second straight day this week, with the second-liner German producer price index data slated for release at 07:00 GMT. The focus in Europe will be on the Bank of England (BOE) inflation report hearings due at 10:00 GMT when the BOE Governor Carney will testify before the Parliamentary Treasury Select Committee along with MPC’s Haldane, Cuncliffe and Saunders. Markets will watch out for fresh take of the central bank on the latest Brexit developments. Meanwhile, the Brexit-related headlines will continue to drive the sentiment across the forex board.

In the NA session, the US housing starts and building permits data will be reported at 13:30 GMT, followed by we have the ECB Vice-President Weidmann speaking at the European Insurance and Occupational Pensions Authority Conference, in Frankfurt, at 15:00 GMT. Also, of note remains the speeches by the BOC Governing Council members Wilkins and Lane that are due at 18:00 GMT and 22:00 GMT respectively.

The OPEC-Joint Ministerial Monitoring Committee (JMMC) meetings are scheduled later today, which will have a major bearing on the oil market. Oil prices edged down on Tuesday morning in Asia as major oil producer Russia adopted a wait-and-see attitude towards OPEC’s potential decision to cut crude output. The US API fuel stocks data will be published at 2130 GMT.

Gold prices on Comex remain stuck below the 1225 level but may continue to edge higher as deteriorating risk appetite across financial markets translates into lower Treasury bond yields.