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Forex Today: US Dollar stabilizes as Fed repricing fades after inflation data

Here is what you need to know on Wednesday, March 15:

The US Dollar managed to shake off the selling pressure on Tuesday after the inflation data from the US revived expectations for a 25 basis points Fed rate hike in March and fueled a rebound in the US Treasury bond yields. Markets remain calm early Wednesday as focus shifts to February Retail Sales and Producer Price Index data from the US. In the early Asian session, fourth-quarter Gross Domestic Product data from New Zealand will be watched closely by investors.

The US Bureau of Labor Statistics reported on Tuesday that the annual Consumer Price Index edged lower to 6% in February from 6.4% as expected. More importantly, Core CPI rose by 0.5% on a monthly basis following the 0.4% growth recorded in January. This reading came in slightly higher than the market expectation of 0.4%. In turn, US Treasury bond yields gained traction and the benchmark 10-year reference gained more than 3% on a daily basis. According to the CME Group FedWatch Tool, markets are currently pricing in an 82% probability of a 25 bps rate hike at the upcoming meeting.

Meanwhile, the new Bank Term Funding Program (BTFP) facility introduced by the Fed in response to the collapse of Silicon Valley Bank and Signature Bank seems to have helped to calm markets down. On Tuesday, Wall Street's three main indexes closed with strong gains.

During the Asian trading hours, the data from China revealed that Retail Sales expanded by 3.5% on a yearly basis in February, matching the market consensus. Industrial Production in the same period grew by 2.4%, compared to analysts' estimate of 2.7%.

EUR/USD continued to stretch higher on Tuesday but seems to have lost its bullish momentum after having touched a fresh multi-week high of 1.0760. In the European morning, the pair trades below 1.0750.

Following the impressive rally witnessed on Monday, GBP/USD closed modestly lower on Tuesday. The pair manages to hold above 1.2150 early Wednesday.

NZD/USD came under modest bearish pressure and declined toward 0.6200 during the Asian trading hours on Wednesday. The data from New Zealand revealed that the Current Account - GDP ratio was -8.9% in the fourth quarter, compared to -7.9% in the third quarter. Citing a comment from Anthony Walker, a director of sovereign ratings for Australia, New Zealand and the Pacific at S&P, Bloomberg reported that New Zealand’s credit grades with S&P Global Ratings could come under pressure if the nation’s current account deficit remains too big. On a quarterly basis, the country's real Gross Domestic Product is forecast to contract by 0.2% in the fourth quarter. 

AUD/USD fluctuates slightly below 0.6700 on Wednesday. In the Asian session, February jobs report data and Consumer Inflation Expectations for March from Australia will be looked upon for fresh impetus. The Reserve Bank of Australia (RBA) will release its quarterly Bulletin as well.

The Bank of Japan's January meeting minutes revealed on Wednesday that members shared the view that the underlying rise in inflation was likely to lead to sustained price rise backed by wage hikes. Following Tuesday's rebound, USD/JPY continued to push higher early Wednesday and was last seen trading above 134.60.

Pressured by rising US T-bond yields, XAU/USD snapped a three-day winning streak on Tuesday. Gold price was last seen trading in a tight range at around $1,900.

Bitcoin retreated below $25,000 early Wednesday after having spiked to its highest level since June above $26,500 on Tuesday. Ethereum also touched a fresh multi-month high near $1,800 before pulling back toward $1,700.

EUR/GBP struggles to gain traction, holds steady around 0.8830 area ahead of UK budget

The EUR/GBP cross edges higher for the second straight day on Wednesday and looks to build on the previous day's goodish rebound from the 0.8775 area,
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India: RBI expected to keep rates unchanged this week – UOB

Economist at UOB Group Lee Sue Ann expects the RBI to maintain its policy rate unchanged for the remainder of the year. Key Quotes “BI’s decision to k
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