Position adjustments ahead of today's US CPI release and FOMC meeting are exerting a modestly heavier tone on the dollar. Both events are typically sources of volatility, and together they promise an eventful North American session. The yen is the sole exception among G10 currencies, though even here, the dollar remains below yesterday's highs.
Gold is trading a bit softer after a 1% rise over the past two sessions, staying within a narrow range of $2311 to $2318. July WTI continues to recover from last week’s five-month low near $72.50.

Asia Pacific Markets
Japan reported a PPI acceleration, with a 0.7% increase last month surpassing expectations and marking the largest rise since November 2022. The year-over-year rate more than doubled to 2.4% from April's 1.1%. Despite this, the yen made little progress yesterday, even with a nearly six basis point pullback in the US 10-year yield, which reversed Monday's gains and slightly offset the surge from last Friday's jobs data.
The Australian dollar has traded slightly above $0.6620 today.

European Markets
The UK's economy stagnated in April after a 0.4% growth in March, with widespread weakness. Industrial output fell sharply by 0.9%, and manufacturing output plummeted by 1.4%, the largest decline since 2020.
The euro edged up to nearly $1.0755 today and has held above $1.0735.
Sterling is buoyant, rising through yesterday's high to reach $1.2760.

American Markets
US May CPI is expected to have edged up by 0.1%, the lowest since last October. While the year-over-year rate may remain unchanged, the three-month annualized rate could ease to 3.2% from 4.4%. The core rate is anticipated to have risen by 0.3%, the same as in April, with the year-over-year rate possibly slipping to 3.5% from 3.6%.
Today's FOMC meeting focus is not on immediate actions, as a rate cut is widely dismissed, but rather on forward guidance through new economic projections and comments from Chair Powell.
The US dollar reached its highest level against the Canadian dollar in nearly two months yesterday, stopping just shy of CAD1.38.