Dollar Selling Halts Ahead of Key US Inflation Data

This is what you need to know to trade today Thursday March 31:

Despite the risk-averse market atmosphere, the dollar continued to weaken against its rivals on Wednesday and the US dollar index fell more than 0.5% before entering a consolidation phase early on Thursday. The US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, in February, along with personal income and personal spending figures. Weekly jobless claims will also appear on the US economic calendar. In the second half of the day, month-end and quarter-end flows could also cause market volatility to increase. Finally, the full OPEC ministerial meeting will take place later in the day.

US PCE Preview for February: Will inflation data confirm a 0.50% increase in May?

Although markets were hopeful for a diplomatic solution to the Russia-Ukraine conflict after Tuesday’s talks, Wednesday’s headlines forced investors to turn cautious. A Kremlin spokesman said they have not noted anything that could be assessed as a “breakthrough” in their negotiations with Ukraine. Ukraine’s Defense Ministry said Russian forces were preparing to resume offensive operations and the Pentagon said Russia was starting to reposition around 20% of the troops it has deployed around kyiv.

Earlier in the day, data from China showed that business activity in the manufacturing and services sectors contracted in March. AUD/USD pairs and NZD/USD found themselves under modest bearish pressure after this data and dipped during Asian trading hours.

For the fourth consecutive day on Thursday, the Bank of Japan (BoJ) made an unlimited purchase of 10-year Japanese government bonds (JGB) at 0.25%. After closing the previous two trading days in the negative territory, the USD/JPY advanced during Asian trading hours but dipped back below 122.00 in European morning.

The GBP/USD pulled back towards 1.3100 earlier in the day but regained traction after the data. The UK Office for National Statistics reported on Thursday that Gross Domestic Product grew 6.6% annually in the fourth quarter, beating the estimate and market expectation of 6.5%.

The EUR/USD is holding on to modest daily gains above 1.1150 early on Thursday after posting surprise gains the previous two days. Germany’s Destatis announced that retail sales rose 0.3% monthly in February, against analysts’ estimate of 0.5%.

The gold it dipped as low as $1,920 during the Asian session on Thursday, but erased a portion of its daily losses as the 10-year US Treasury yield turned south and lost nearly 1% on the day.

The Bitcoin continues to fluctuate in a tight range near $47,000 for the second day in a row on Thursday. ethereum struggled to find direction on Wednesday and remains relatively quiet around $3,400 early Thursday.