Forex Today: Markets turn cautious as focus shifts to US data, FOMC Minutes

Here is what you need to know on Wednesday, August 17:

Following Tuesday's choppy action, the US Dollar Index regained its traction early Wednesday and climbed above 106.60 with investors turning cautious. The Gross Domestic Product data for the second quarter will be featured in the European economic docket. Later in the day, July Retail Sales data from the US will be looked upon for fresh impetus before the FOMC published the minutes of its July meeting at 1800 GMT. Reflecting the souring market mood, US stock index futures are down between 0.2% and 0.4% in the early European session.

FOMC July Minutes Preview: Can it influence September Fed rate hike expectations?

During the Asian trading hours, the Reserve Bank of New Zealand announced that it hiked its policy rate by 50 basis points to 3% as expected. Speaking on the economic outlook, RBNZ Governor Adrian Orr said that although they were not forecasting a recession, they were expecting growth to be sub-par. With the initial reaction, NZD/USD climbed toward 0.6400 but ended up reversing its direction with the dollar gathering strength during the European trading hours. As of writing, the pair was down 0.4% on the day at 0.6318.

The UK's Office for National Statistics reported on Wednesday that inflation in the UK, as measured by the Consumer Price (CPI), climbed to 10.1% in July from 9.4% in June. In the same period, the Core CPI edged higher to 6.2% from 5.8%, surpassing the market expectation of 5.9%. With the immediate reaction, GBP/USD spiked above 1.2140 before erasing its gains and returning below 1.2100.

With the greenback keeping its footing mid-week, EUR/USD continues to fluctuate in a relatively tight range below 1.0200. 

USD/JPY built on Tuesday gains and rose toward 135.00 on Wednesday. The benchmark 10-year US Treasury bond yield is up more than 2% on the day, fueling the pair's advance.

After having recovered above $1,780 during the Asian trading hours, gold turned south and was last seen trading in negative territory slightly above $1,770.

Bitcoin is struggling to stage a convincing rebound amid risk aversion and trades in negative territory below $24,000 after having posted losses in the previous three days. Following a recovery attempt, Ethereum lost its momentum and erased a large portion of its daily gains. As of writing, ETH/USD was clinging to small daily gains at $1,890.