This is what you need to know to trade today Wednesday April 13:
The dollar lost interest after the US inflation data on Tuesday, but managed to regain its traction thanks to the Fed’s hawkish comments. With market sentiment improving at the start of Wednesday, the index US Dollar (DXY), which touched its highest level in almost two years at 100.44 earlier in the day, is turning lower. The Bank of Canada will announce its interest rate decision later and the US economic docket will include March Producer Price Index data.
Bank of Canada Preview: Three Things Shaking the CAD Beyond the 50bp Rise
The US Bureau of Labor Statistics announced Tuesday that annual inflation, as measured by the consumer price index (CPI), jumped to a new multi-decade high of 8.5% in March. The core CPI, however, came in at 6.5%, slightly below the market expectation of 6.6%. Later, Richmond Fed President Thomas Barkin argued that they should quickly raise interest rates to a level where borrowing costs no longer stimulate the economy. Fed Vice Chair Lael Brainard said the balance sheet reduction could come in June after announcing the rate decision in May. Brainard further noted that the balance sheet liquidation could be worth “two or three additional rate hikes” over its course.
Meanwhile, in a video addressed to the Lithuanian parliament on Tuesday, Ukraine’s President Volodymyr Zelenskyy called on the European Union to sanction all Russian banks and oil imports in the next package of measures. Reuters also reported that US President Joe Biden was expected to announce $750 million in military aid for Ukraine on Wednesday in its fight against Russian forces.
In early European morning trading, US stock futures are up 0.7%-1%, the 10-year Treasury yield rises 1% to 2.75%, and DXY posts small losses near 100.20.
The EUR/USD extended its decline towards 1.0800 during Asian trading hours, but managed to bounce back towards 1.0850. There will be no high-impact Eurozone data releases on Wednesday and risk perception could boost the pair’s action.
The GBP/USD is posting small daily gains above 1.3000 at the start of the European session. Data released by the UK Office for National Statistics revealed on Wednesday that the annual CPI jumped to 7% in March from 6.2% in February. This reading beat analysts’ estimate of 6.7% and helped the British pound find demand.
The NZD/USD rallied strongly to a fresh daily high of 0.6900 during Asian trading hours, but lost its upside momentum. The Reserve Bank of New Zealand (RBNZ) announced that it raised the policy rate by 50 basis points to 1.5%. In its monetary policy statement, the RBNZ noted that it will be appropriate to continue to tighten monetary conditions going forward.
The Prayed took advantage of falling US Treasury yields on Tuesday and rose to its highest level in a month at $1,978. XAU/USD appears to have entered a consolidation phase near $1,970 early on Wednesday.
The Bitcoin is trading just shy of $40,000 after failing to break below that level on Tuesday. The ethereum posted modest daily gains on Tuesday and was last seen trading in a tight range above $3,000.
Source: Fx Street
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