Forex Today: US Dollar stabilizes ahead of key data releases

Here is what you need to know on Tuesday, October 17:

The US Dollar (USD) weakened against its rivals on Monday as risk flows dominated the action in financial markets following a bullish opening in Wall Street. The cautious market stance helps the USD holds its ground early Tuesday as investors await September Retail Sales and Industrial Production data from the US. Several Federal Policymakers are scheduled to speak later in the session as well.

Despite escalating geopolitical tensions, major equity indexes in the US registered strong gains on Monday. In the European morning, US stock index futures trade modestly lower. According to the latest headlines surrounding the Israel-Hamas conflict, heavy bombardments took place in southern Gaza - Khan Younis, Rafah and Deir el-Balah. Meanwhile, US President Joe Biden will travel to Israel on Wednesday. Israel Defense Forces international spokesperson Lt. Col. Jonathan Conricus told CNN that Biden's visit would not complicate or delay a ground operation in Gaza. 

USD/CAD closed deep in negative territory on Monday before stabilized slightly above 1.3600 early Tuesday. Statistics Canada will release Consumer Price Index (CPI) data for September and the Bank of Canada (BoC) will publish core inflation figures. 

During the Asian trading hours, the data from New Zealand revealed that inflation in the third quarter, as measured by the change in the Consumer Price Index (CPI), rose to 1.8% on a quarterly basis from 1.1% in the second quarter. This reading came in below the market expectation of 2%. NZD/USD came under heavy bearish pressure after this data and the pair was last seen trading near 0.5900, losing 0.5% on a daily basis.

The Reserve Bank of Australia's (RBA) minutes of the October policy meeting showed on Tuesday that policymakers considered raising the policy rate by another 25 basis points or holding it steady before deciding to leave it unchanged. “Members acknowledged upside risks to inflation were a significant concern," the RBA noted. AUD/USD gained traction in the Asian session and climbed above 0.6350.

EUR/USD closed in positive territory on Monday but struggled to extend its rebound. In the early European session, the pair went into a consolidation phase at around 1.0550.

Annual wage inflation in the UK, as measured by the change in Average Earnings Excluding Bonus, edged lower to 7.8% in August from 7.9% in July, the UK's Office for National Statistics reported on Tuesday. GBP/USD came under modest bearish pressure after this data and was last seen losing 0.3% on the day at 1.2175.

USD/JPY failed to make a decisive move in either direction on Monday and extended its sideways grind at around 149.50 early Tuesday.

Gold registered losses despite the USD weakness on Monday as US Treasury bond yields pushed higher. XAU/USD consolidates its losses near $1,920 on Tuesday and the 10-year US Treasury bond yield clings to daily gains near 4.75%.