Dollar slides modestly as focus turns to inflation data

During the Asian session, RBA Deputy Governor Kent will deliver a speech. Additionally, Japan will release its Machinery Tool Orders report. Later in the day, the key reports to watch for will be the US Producer Price Index (PPI) and the release of the FOMC minutes.

Here is what you need to know on Wednesday, October 11:

The US Dollar lost ground again as the improvement in market sentiment continued, and US yields remained far from recent highs. The 10-year yield settled at 4.65%, while the 2-year yield slipped below 5%. The DXY index posted its lowest daily close since September 18, dropping below 106.00.

On Wednesday, the US will release the September Producer Price Index (PPI), which could have significant implications if it surprises to the upside. Later in the day, the Federal Reserve (Fed) will release the minutes from the September FOMC meeting. On Thursday, the Consumer Price Index (CPI) is due.

Wall Street finished with gains on Tuesday, which weighed on the US dollar. Crude oil pulled back modestly, trading within moderate ranges. Commodity prices showed mixed moves, holding onto recent gains. The situation in the Middle East continues to be a source of uncertainty.

EUR/USD rose above the 20-day Simple Moving Average (SMA) for the first time since August. The pair is trading around 1.0600 and faces key resistance at 1.0630. Germany will release the final CPI for September on Wednesday.

GBP/USD also rose above the 20-day SMA. The rally faded near 1.2300, but short-term momentum still favors the Pound.

The Japanese yen was the underperformer on Tuesday among G10 currencies. The modest rebound in yields combined with rising equity prices weighed on the currency. USD/JPY peaked above 149.00 but then pulled back to 148.60.

AUD/USD rose for the fifth consecutive day. The pair is holding firm above 0.6400, looking set to extend the recovery. Key resistance awaits at 0.6500.

NZD/USD held above 0.6000 and posted its highest daily close in two months at 0.6040. It also rose for the fifth consecutive day.

USD/CAD moved sideways near the 1.3600 area as the Canadian Dollar consolidated recent gains. A flat 20-day SMA is awaits at 1.3555.