Forex Today: Volatility set to rise on UK budget, BoC rate decision and Fed Chairman Powell testimony

Here is what you need to know on Wednesday, March 6:

Following another day of choppy action in financial markets, volatility is set to rise on key data releases and macroeconomic events on Wednesday. The UK will publish the Spring budget and Eurostat will release January Retail Sales data for January. Later in the session, ADP Employment Change for February and January JOLTS Job Openings will be featured in the US economic docket. The Bank of Canada (BoC) will announce monetary policy decisions, and Federal Reserve Chairman Jerome Powell will testify before the House Financial Services Committee.

The US Dollar (USD) Index declined toward 103.50 as the benchmark 10-year US Treasury bond yield broke below 4.2% in the early American session on Tuesday. The negative shift seen in risk mood, as reflected by the bearish action in Wall Street, however, helped the USD benefit from safe-haven flows and find a foothold. Early Wednesday, the USD Index fluctuates slightly below 104.00 and the 10-year yield holds steady at around 4.15%. Meanwhile, US stock index futures trade mixed.

EUR/USD closed virtually unchanged on Tuesday and extended its sideways grind near 1.0850 into the European session on Wednesday. 

EUR/USD consolidates around mid-1.0800s ahead of US data, Fed’s Powell.

GBP/USD touched its highest level since early February at 1.2735 on Tuesday closed in positive territory for the third consecutive day. The pair stays in a consolidation phase in the European morning on Wednesday.

GBP/USD improves to near 1.2700 ahead of UK Budget Report.

The BoC is widely expected to leave its policy rate unchanged at 5% following the March meeting. USD/CAD registered small gains on Tuesday and registered its highest daily close of 2024 near 1.3600.

BoC Preview: Forecasts from seven major banks, another dovish hold.

The data from Australia showed earlier in the day that the Gross Domestic Product expanded at an annual rate of 1.5% in the fourth quarter. This reading followed the 2.1% growth recorded in the previous quarter and came in slightly better than the market expectation for an expansion of 1.4%. AUD/USD started to edge higher in the Asian trading hours and was last seen trading in positive territory above 0.6500.

Australian Dollar gains ground amid a stable US Dollar, Fed Powell’s testimony awaited.

USD/JPY came under bearish pressure and snapped a two-day winning streak on Tuesday. The pair continues to inch lower early Wednesday and was last seen trading below 150.00.

Japanese Yen remains on the front foot against USD, traders await Fed Chair Powell's testimony.

Gold staged a correction after coming in within a touching distance of a new record high above $2,040 in the American session on Tuesday. XAU/USD holds steady slightly below $2,030 in the European morning on Wednesday.

Gold price remains depressed below all-time peak, looks to Fed's Powell for fresh impetus.