Cautious mood persists as focus shifts to US inflation data, FOMC Minutes

Major currency pairs stayed within familiar ranges on Tuesday as investors remained on the sidelines while waiting for high-impact data releases. The sour market mood made it difficult for risk-sensitive assets to find demand but falling US Treasury bond yields weighed on the dollar. The US Dollar Index was posting modest daily losses around 94.35 at the time of press and the benchmark 10-year US T-bond yield, which lost 3.5% on Tuesday, was down 0.5%.

Macro data: The data from the US showed that the NFIB Business Optimism Index edged lower to 99.1 from 100.1 in August and JOLTS Job Openings declined to 10.3 million in August, missing the market expectation of 10.9 million. The US Bureau of Labor Statistics will publish the September Consumer Price Index (CPI) at 1230 GMT and the Federal Reserve will release the minutes of its September policy meeting at 1800 GMT.

Wall Street: Pressured by a more-than-1% decline witnessed in the Communication Services Index, the S&P 500 lost 0.24% on Tuesday and the Nasdaq Composite erased 0.15%. Furthermore, the Dow Jones Industrial Average fell 0.35%. Meanwhile, the US House approved the legislation to temporarily raise the debt ceiling until early December but this development doesn’t seem to be having a noticeable impact on market sentiment.

EUR/USD pair slumped to its weakest level since July 2020 at 1.1524 as dovish commentary from European Central Bank (ECB) policymakers continues to hurt the common currency. Currently, the pair is posting modest recovery gains around 1.1550.

GBP/USD fluctuates around 1.3600 for the third straight day on Wednesday. The data from the UK revealed that the Industrial Production and Manufacturing Production both expanded at a stronger pace than expected in August but market participants showed little to no interest in these data.

USD/JPY lost its bullish momentum on falling US Treasury bond yields but stays within a touching distance of the 34-month high it set at 113.80 on Tuesday.

Crude oil prices stay in a consolidation phase following the impressive upsurge seen earlier in the week. The Barrel of West Texas Intermediate is staying relatively quiet above $80 ahead of the EIA’s weekly Crude Oil Stocks Change on Thursday.

Gold managed to close in the positive territory on Tuesday and holds above $1,760 in the early European session on Wednesday. Nevertheless, XAU/USD might need to break out of the $1,750-70 range to attract investors.

Cryptocurrencies: Bitcoin extended its technical correction and lost more than 2% on Tuesday. Currently, BTC is testing $55,500. Meanwhile, Ethereum and Ripple both trade in the negative territory. In its recently published Global Financial Stability Report, the International Monetary Fund advised against developing economies adopting digital currencies.

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