Forex Today: Market volatility to remain high on German inflation report and high-tier US data

Here is what you need to know on Wednesday, August 30:

The US Dollar holds its ground early Wednesday after suffering large losses against its rivals on Tuesday. The European Commission will release business and consumer sentiment data for the Euro area. Later in the session, Consumer Price Index (CPI) figures from Germany will be watched closely by market participants. The US economic docket will feature August ADP Employment Change, July Goods Trade Balance and Gross Domestic Product (GDP) data for the second quarter.

The US Dollar Index turned south and lost 0.5% on Tuesday after the US Bureau of Labor Statistics reported that the number of job openings on the last business day of July declined to 8.82 million from 9.16 million (revised from 9.58 million) in June. The benchmark 10-year US Treasury bond yield declined more than 2% after this report and further weighed on the USD. In the European morning on Wednesday, the USD Index clings to small daily gains slightly above 103.50 and the 10-year US yield stays in positive territory above 4.1%.

The data from Australia showed in the Asian session that the annual CPI rose 4.9% in July, down noticeably from the 5.4% increase recorded in June and below the market expectation of 5.2%. Following Tuesday's upsurge, AUD/USD lost its traction on soft inflation data. At the time of press, the pair was down 0.3% on the day at 0.6460.

After climbing to its highest level since November above 147.00 on Tuesday, USD/JPY made a sharp U-turn in the American session and closed the day in negative territory below 146.00. Bank of Japan (BoJ) board member Naoki Tamura said early Wednesday the timing of the exit from the easy policy must be not "too late but not too early," while refraining from commenting on exchange rates. The pair stays in positive territory near 146.50 in the European session.

EUR/USD gained more than 50 pips on Tuesday but lost its bullish momentum before testing 1.0900. The pair was last seen consolidating its weekly gains slightly above 1.0850.

GBP/USD closed the second straight day in positive territory on Tuesday as it benefited from USD weakness and improving risk mood. The pair holds steady above 1.2600 mid-week.

Gold price rose sharply on Tuesday and reached its highest level in three weeks near $1,940. With the 10-year US yield erasing some of its weekly gains on Wednesday, XAU/USD trades modestly lower on the day at around $1,935.

Bitcoin gathered bullish momentum and climbed above $27,000 on Tuesday before going into a consolidation phase at around $27,500. Ethereum gained nearly 5% on Tuesday and stabilized above $1,700. 

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