Forex Today: Japanese Yen remains volatile, mood turns upbeat

Here is what you need to know on Wednesday, August 7:

Japanese Yen remains as one of the biggest movers among major currencies on Wednesday. The economic calendar will not offer any high-impact data releases midweek and investors will continue to pay close attention to changes in risk perception, while keeping an eye on geopolitics.

Following the sharp decline seen at the beginning of the week, USD/JPY staged a rebound on Tuesday but erased its gains to end the day virtually unchanged. The pair gathers bullish momentum early Wednesday and trades at around 147.00, where it's up nearly 2% on a daily basis. Bank of Japan (BoJ) Deputy Governor Shinichi Uchida said earlier in the day that there are now more factors that require the BoJ to be more cautious with respect to the timing of the next interest rate hike. "If the market volatility changes our view on prospects for achieving the price goal, that will influence our decision on rate hike path," he added. In the Asian session on Thursday, the BoJ will publish the Summary of Opinions.

After closing in positive territory on Tuesday, the US Dollar Index (DXY) preserves its recovery momentum and trades above 103.20 in the European session on Wednesday. Later in the American session, the US Treasury will hold a 10-year note auction. Consumer Credit Change data for June will be the only data release from the US. After rising nearly 3% on Tuesday, the 10-year US yield holds steady at around 3.9% in the European morning. Meanwhile, US stock index futures rise between 0.5% and 0.8%.

USD/CAD fell for the third consecutive trading day on Tuesday and touched a two-week low near 1.3750. The pair struggles to gain traction early Wednesday and trades at around 1.3770. Ivey Purchasing Managers Index for July will be featured in the Canadian economic docket later in the day. Additionally, the Bank of Canada (BoC) will publish the Summary of Deliberations from its July policy meeting.

Statistics New Zealand reported in the Asian session that the Unemployment Rate in New Zealand climbed to 4.6% in the second quarter from 4.3% in the first quarter. The Employment Change was up 0.4% in this period, better than the market expectation for a 0.2% decline. In the meantime, the data from China showed that the trade surplus shrank to $84.65 billion in July from $99.05 billion in June. NZD/USD gathered bullish momentum and was last trading slightly above 0.6000, rising over 0.8% on the day.

EUR/USD staged a downward correction and closed in the red on Tuesday. The pair continues to edge lower but manages to hold above 1.0900 in the European session on Wednesday.

GBP/USD lost over 0.5% on Tuesday and registered its lowest daily close in a month. The pair stays on the back foot and trades below 1.2700 in the European morning.

Gold failed to gather recovery momentum and closed below $2,400 on Tuesday. XAU/USD holds relatively stable at around $2,390 to start the European session.