Investors observed heightened volatility in some currencies on Wednesday following key data releases and central bank decisions.
In the second half of the day, housing starts and building permits data for January will be featured in the US economic docket. Later in the American session, the Federal Reserve will release the minutes of the January FOMC policy meeting.
US President Donald Trump said late Tuesday that they are looking to impose auto tariffs “in the neighbourhood of 25%” as early as April 2. He further added that they are also planning to charge similar duties on pharmaceutical and semiconductor imports.
The DXY Dollar Index edged slightly higher in the American session and registered small gains for the day, holding steady near 107.00.
The Reserve Bank of New Zealand (RBNZ) announced that it lowered the policy rate by 50 basis points (bps) to 3.75% from 4.25%, as anticipated.
In the policy statement, the RBNZ noted that they have confidence to continue to lower rates and Governor Adrian Orr explained afterward that the policy rate is projected to be lowered by another 50 bps by July.
After dropping to a daily low of 0.5677 with the immediate reaction to RBNZ announcements, NZDUSD regained its traction and was last seen trading in positive territory above 0.5700.
The UK’s Office for National Statistics reported early Wednesday that inflation, as measured by the change in the consumer price index (CPI), climbed to 3% in January from 2.5% in December. In the same period, the core CPI increased by 3.7%, as anticipated.
Other details of the report showed that the retail price index declined by 0.1% on a monthly basis. GBPUSD holds steady above 1.2600 following these data releases.
EURUSD lost about 0.4% on Tuesday, but managed to find a foothold. In the European trading on Wednesday, the pair was in a tight range at around 1.0450.
After snapping a three-day losing streak on Tuesday, USDJPY came under renewed bearish pressure and declined below 152.00 on Wednesday.
Bank of Japan Board Member Hajime Takata said on Wednesday that the BoJ must gradually shift policy, even after January’s rate hike, to avoid upside price risks from materializing.
Gold gathered bullish momentum and rose more than 1% on Tuesday.
XAUUSD was in a consolidation phase above $2,930 on Wednesday and remains within a touching distance of the all-time high it set at $2,942 earlier this month.
(Source: OANDA)
