Forex Today: US Dollar post-CPI gains remain limited

Here is what you need to know on Wednesday, March 13:

The US Dollar (USD) is having a tough time gathering recovery momentum early Wednesday. After posting modest daily gains on Tuesday, the USD Index (DXY) holds steady slightly below 103.00 in the European morning. The US economic docker will not offer any high-impact macroeconomic data releases later in the day. Eurostat will release Eurozone Industrial Production data for January. 

The data from the US showed on Tuesday that inflation, as measured by the change in the Consumer Price Index (CPI), edged higher to 3.2% on a yearly basis from 3.1% in January. On a monthly basis, the CPI and the Core CPI, which excludes volatile food and energy prices, both increased 0.4%. The benchmark 10-year US Treasury bond yield recovered above 4.1% after inflation data and helped the USD find demand. The risk-positive market atmosphere, however, didn't allow the currency to continue to gather strength. Early Wednesday, the 10-year US yield holds steady at around 4.15% and US stock index futures trade mixed.

Citing Japanese news outlets, Reuters reported on Wednesday that Japan's largest trade union confederation's, Rengo, demand for pay rises of 5.85%, or JPY18,215, this year, had been met. Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said that he wants to see widespread wage rises across the economy, adding that it's important for wage hikes to spread to mid-sized, small companies. After rising nearly 0.5% on Tuesday, USD/JPY stays relatively quiet above 147.50 to start the European session.

Commenting on these developments, "we must scrutinize whether a positive wage-inflation cycle emerges, in deciding whether conditions for phasing out stimulus are falling into place," Bank of Japan (BoJ) Governor Kazuo Ueda said.

Japanese Yen bulls seem non-committed despite bets for an imminent shift in BoJ's stance.

GBP/USD holds steady at around 1.2800 in the European morning after closing the second consecutive day in negative territory on Tuesday. The UK's Office for National Statistics reported that the real Gross Domestic Product (GDP) expanded by 0.2% on a monthly basis in January. This reading followed the 0.1% contraction recorded in December and came in line with the market expectation.

Gold snapped a nine-day winning streak on Tuesday and lost more than 1%, pressured by recovering US T-bond yields. XAU/USD stays in a consolidation phase at around $2,160 on Wednesday.

Gold price sticks to modest gains as sliding US bond yields keep USD bulls on defensive.

EUR/USD staged a recovery after meeting support near 1.0900 and closed the day flat on Tuesday. The pair fluctuates in a tight range near 1.0930 in the European morning.