While investors are anticipating a smaller rate hike, the US dollar is consolidating in a narrow range of 101.7-102.0. Today, it has already tested the resistance level of 101.5 versus its main rivals. After that, it rose slightly to 101.8.

Given that on Tuesday the US currency was rather volatile following PMI data, today and tomorrow there could be new price swings in the greenback. The PMI Manufacturing Index is a leading economic indicator of production and inflation. Its growth has a positive effect on the US dollar.

However, the US currency remains in the bears’ claws. The Manufacturing PMI Index for January amounted to 46.8%, remaining below the critical level of 50.0. It means that it is still contracting. So, investors should be ready for new sharp movements of the US dollar index before the publication of GDP data and other macro stats on Thursday.
The yen is also hesitant to pick up a trajectory. It is consolidating in the range of 130.0-130.6. The main drivers for the yen are mixed results on Wall Street, the weakness of the US dollar, and falling government bond yields.
However, the difference in monetary stance between the Bank of Japan and the Fed is facilitating a further rise in the dollar/yen pair. In the Asian session, it showed moderate growth. After a reversal from the weekly high of 131.1 yesterday, the pair was trading at 130.4.
Overall, it is trading choppily before the release of crucial US data. It is trying to settle at 130. Given the possible policy reversal by the Bank of Japan in several months, the bears are likely to take the upper hand.
Whereas the yen and the US dollar are consolidating ahead of economic reports, the Aussie surged following inflation data. Annual inflation in Australia jumped to the highest levels since the early 1990s.

Food prices rose to a whopping 9.2% in the fourth quarter. It happened against the background of an increase in consumption during the winter holidays and the full recovery of the country's economy.

Yesterday, Treasurer of Australia Jim Chalmers calmed the markets and said that the worst part of the inflation crisis is over.

However, given the recent highs, inflation has not peaked yet. Analysts do not rule out the fact that the RBA will have to raise interest rates more aggressively at its next meeting in February.
On Wednesday morning, the Aussie broke through the resistance level of 0.7100 for the first time in the last five months. It soared even higher to 0.7117. In the Asian session, the AUD/USD pair was moving in the upward channel of 0.7032-0.7125.

Due to mounting inflationary pressure, the quotes were hovering at 0.7102. New support levels may be located at the recent lows of 0.6872 and 0.6860. Resistance levels are seen at the previous highs of 0.7137 and 0.7283.

The NZD/USD pair has an opposite dynamic. Consumer prices in New Zealand dropped to 7.2%, which was below the Reserve Bank of New Zealand’s projection of 7.5%. It reinforced expectations of less aggressive rate increases this year.

The pair sank to 0.6484. In the Asian session, it was trading in the downward range of 0.6467-0.6507.

00:00 Intro
00:30 US FED FUNDS RATE
01:50 USDX
02:51 USD/JPY
03:48 AUD/USD
05:24 NZD/USD

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