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Dollar Steady Ahead of Key Economic Data

The dollar has drifted in early European forex trading on Wednesday. Worries over the resurgence of the Covid-19 virus is competing with the encouraging economic data for prominence.

At 2:50 AM ET (0650 GMT), the dollar index was largely flat at 97.343.

In forex, EUR/USD was flat at 1.1232. GBP/USD fell by 0.1% to 1.238, while USD/JPY was down by 0.2% at 107.67. 

The U.S. recorded its biggest single-day spike since the pandemic began, at 47,000 infections on Tuesday.

Its top infectious disease expert, Anthony Fauci, told a Senate committee that clearly they’re not in total control right now. Cases could increase by as much as 100,000 daily if the outbreak is not contained, he added.

That said, the FX market has traded in tight ranges on Wednesday. Investors were cautious ahead of some closely-watched economic data.

German retail sales soared by 13.9% in May, some data from Wednesday showed. They rebounded strongly after the fall of a revised 6.5% in April. The Chinese manufacturing sector showed promising signs of recovery, according to the Caixin manufacturing PMI. 

The U.S. Institute for Supply Management‘s purchasing managers’ index for manufacturing should show continued recovery. It will likely show that activity in June recovered from the 11-year low marked in April. Thursday’s closely-watched U.S. non-farm payrolls report is forecast to show that the economy added 3 million jobs in June.

Dollar Investors Anticipate Fed Discussions Results

Traders also await the release of the FOMC minutes from the June meeting.

Analysts at Danske Bank said that of particular interest are the Fed members’ discussions on yield curve control. This was what Fed Chair Powell mentioned in his prepared remarks at the press conference after the policy announcement. 

Elsewhere, Sweden’s Riksbank is set to make its latest rate announcement later on Wednesday. However, forex exchange market participants are not expecting a policy change.

This time around, it seems likely that the Riksbank will present actual forecasts for growth inflation and the policy rate. This is simply in contrast with just different scenarios, as was the case in the previous policy report, Danske Bank added.

Forex news reports that the euro, Swedish krona traded flat at 10.4682 and the dollar, Swedish krona at 9.3193.

The Russian ruble fell to its lowest in over a month after some fresh allegations in the U.S. press. The allegations say that the country offered Afghan militia bounties to execute U.S. servicemen. The reports have intensified fears that the U.S. will broaden existing sanctions on Russia. 

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