Forex today in Wednesday’s trading was mainly dominated by broad-based US dollar recovery, stemming mainly from mild risk-aversion amid renewed US-China trade woes and the latest reports on North Korea’s nuke testing. The USD/JPY recovery stalled near 111.70 region, as the safe-haven Yen found some footing on the back of a retreat in the Asian equities amid pre-Fed caution trading. Among the European currencies, the Euro traded back to the 1.1350/40 band, with the bias leaning to the downside while the Pound traded on the back foot amid looming Brexit uncertainty.
The EUR session was a busy one, with the German PPI data at 07:00 GMT, followed by the ECB non-monetary policy meeting at 08:00 GMT. The main highlight for the EUR calendar today was the UK inflation data reported at 09:30 GMT. The UK CPI 12-month rate came in at 1.9% in February, up from January’s 1.8% and bettering the 1.8% print expected. Meanwhile, core CPI arrived at 1.8% y/y versus 1.9% booked in January, missing the consensus forecast.
Later in the NA session, all eyes remain on the FOMC monetary policy decision, as markets eye the Fed’s outlook on the interest rates for this year and the economic projections. The speech by the Fed Chair Powell will also remain the key event risk.
Oil prices fell on Wednesday in Asia as uncertainty on the Sino-U.S. trade front intensified. U.S. officials are concerned that China might refuse to accept U.S. demands in the countries’ ongoing trade talks. Meanwhile, Chinese negotiators want to receive more assurances that tariffs imposed on Chinese goods would be lifted once a deal is struck. This raised concerns that trade talks between the two sides might stall, and that outlook for global economic growth might be clouded as a result. On the other hand, Saudi Arabia has reportedly pledged bigger-than-needed cuts in its April shipments, while Russia also said it is planning to accelerate its progressive reductions.
Gold prices retreated on Wednesday as traders awaited the Federal Reserve’s latest monetary policy statement later in the day. The Federal Reserve’s Federal Open Market Committee (FOMC) began its two-day policy meeting on Tuesday, with a decision on interest rates due later today. Markets widely expect the Fed to deliver a more dovish message about the outlook for further rate hikes, with traders set to closely watch the Fed’s language in its statement and remarks by Chairman Jerome Powell.