Forex Today: Pound volatility rises, dollar consolidates ahead of FOMC Minutes

Here is what you need to know on Wednesday, October 12:

The British pound's volatility continues to rise on Wednesday amid conflicting signals regarding the Bank of England's (BoE) emergency bond-buying programme. The dollar consolidates its gains with the US Dollar Index staying in negative territory following a five-day winning streak. The US economic docket will feature the Producer Price Index (PPI) data for September. In the late American session, the Federal Reserve will release the minutes of its September meeting. Europen Central Bank President Christine Lagarde is scheduled to deliver a speech and market participants will keep a close eye on developments surrounding the BoE.

While speaking at an event in Washington, BoE Governor Andrew Bailey reminded pension fund managers that they have three days, until the end of the week, to finish rebalancing their positions when the emergency bond-buying programme concludes. During the Asian trading hours, however, the Financial Times reported that the BoE signalled bankers that it could extend the bond-buying programme. The 2-year UK gilt yield fell nearly 4% on Tuesday but it's already up 2% on Wednesday.

The UK's Office for National Statistics reported that the Gross Domestic Product contracted by 0.3% on a monthly basis in August following July's 0.1% expansion. In the same period, Industrial Production and Manufacturing Production declined by 1.8% and 1.6%, respectively. After having dropped toward 1.0900 earlier in the day, GBP/USD spiked above 1.1050 on BoE headlines but retreated to the 1.1000 area in the European morning.

Meanwhile, US stock index futures are up between 0.7% and 1.1% in the early European session, pointing to an improving market mood. The Federal Reserve Bank of New York's latest Survey of Consumer of Expectations showed on Tuesday that consumers' one-year inflation expectation declined to a new 12-month low of 5.4% from 5.7% in August's survey.

EUR/USD clings to modest daily gains above 0.9700 early Wednesday. Eurostat will release the August Industrial Production data later in the session.

USD/JPY climbed to a fresh multi-decade high at 146.38 in the Asian session and surpassed the level that triggered the Bank of Japan's intervention in late September. Japanese Chief Cabinet Hirokazu Secretary said that they were closely watching FX moves and added that they will take appropriate steps but these comments failed to trigger a deep correction. As of writing, the pair was trading in positive territory above 146.00.

Gold climbed above $1,680 amid retreating US Treasury bond yields on Tuesday but failed to end the day in positive territory. XAU/USD benefits from the modest selling pressure surrounding the greenback mid-week and trades above $1,670.

Bitcoin extended its slide and dipped below $19,000 before erasing a small portion of its losses. At the time of press, BTC/USD was trading slightly higher on the day at $19,150. Ethereum dropped to a weekly low of $1,267 on Tuesday but recovered toward $1,300 early Wednesday.