Forex Today: Only a correction? Dollar trying to lick its wounds amid Sino-American tensions

Here is what you need to know on Wednesday, May 27:

The market mood remains upbeat yet the dollar is attempting to recover after a significant drop on Tuesday. Tensions between the world's largest economies is supporting the greenback while hopes for global recovery weigh on it. 

Sino-American tensions: The US is considering sanctions against Chinese officials for actions in Hong Kong and may present them as early as this week. Reuters reports that Beijing has expanded the scope of its controversial security law.

China reported a drop of 4.3% yearly in industrial profits, recovering in comparison to March. Oppo, a major mobile homemaker, is pushing to develop its own chips – part of the decoupling from the US.

US data: New Home Sales beat expectations with a minor increase in April while the Conference Board's Consumer Confidence came out at 86.6, within estimates. The Federal Reserve's Beige Book is due out later in the day.

US Consumer Confidence: From stability to improvement?

Vaccine efforts: Inovio has joined a list of firms reporting progress on efforts to find immunization for COVID-19. It joins Moderna, Merck, Novavax, the University of Oxford, and others. The Japanese government will reportedly allocate over ¥200 billion to efforts for discovering a vaccine. 

The European Commission will set out its recovery plan while both Germany and France are supporting their automotive industries. The European Central Bank is reportedly considering removing its capital keys, allowing it to buy bonds independently of the country's economic weight. Economists expect the ECB to enlarge its bond-buying scheme next week. Christine Lagarde, president of the bank, will speak later in the day.

UK: Senior Downing Street adviser Dominic Cummings' lockdown violation continues dogging the government as it eases restrictions. The pound advanced on Tuesday amid reports that the EU is ready to make concessions to the UK in Brexit talks. 

AUD/USD and NZD/USD consolidated their gains. Australia's Construction Work Done beat expectations with a drop of only 1% in the first quarter. 

Gold is trying to find its feet above $1,700 after tumbling on Tuesday. WTI oil is stable at around $34. 

Cryptocurrencies: China's central bank is planning to launch a sovereign digital currency by the 2022 Winter Olympics. Trials are ongoing in several cities. Bitcoin is trading around $8,800, consolidating previous moves. 

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