FX Today: US inflation steps in

The US Dollar (USD) lost some of its shine on Monday, weighed down by renewed concerns over the Fed’s independence as investors seem to have started to pencil in a (more?) dovish Fed in the upcoming months. Prudence among market participants also kicked in ahead of the release of the key US CPI on Tuesday.

Here’s what to watch on Tuesday, January 13:

The US Dollar Index (DXY) came under fresh selling pressure, leaving behind four consecutive days of gains and briefly slipping back to the 98.70 region. The Inflation Rate will take centre stage, seconded by the NFIB Business Optimism Index, the ADP Employment Change Weekly, New Home Sales, and the RCM/TIPP Economic Optimism Index. In addition, the Fed’s Williams, Musalem and Barkin are due to speak.

EUR/USD found some respite from its recent steep retracement, advancing to the boundaries of the 1.1700 barrier. Next on tap on the domestic calendar will be the German Full Year GDP Growth, followed by Industrial Production and the Balance of Trade in the broader Euroland, all due on January 15.

GBP/USD rose sharply largely in response to the renewed weakness hurting the Greenback, refocusing its attention on the 1.3500 level. The BRC Retail Sales Monitor is due next across the Channel.

USD/JPY extended its leg higher, once again surpassing the 158.00 hurdle amid the widespread improvement in the risk complex. The Current Account results will be released alongside Bank Lending figures and the Eco Watchers Survey.

AUD/USD set aside part of its recent weakness, managing to reclaim the key 0.6700 barrier. The Westpac Consumer Confidence Index will be next on tap in Oz.

WTI prices traded on the positive foot at the beginning of the week amid jitters over potential supply disruptions in Iran while traders continued to evaluate developments from Venezuela.

Gold prices advanced for the third day in a row on Monday, reaching at the same time an all-time top around $4,630 per troy ounce. The move higher in the precious metal came on the back of renewed selling pressure on the Greenback and the pick-up in geopolitical effervescence in the Middle East. Silver prices followed suit, advancing past the $85.00 mark per ounce for the first time in history.