Forex Today: Key data releases and FOMC Minutes point to volatile day ahead of US holiday

Here is what you need to know on Wednesday, July 3:

The US Dollar (USD) struggles to find demand early Wednesday but the Japanese Yen trades at its weakest level in nearly four decades against the USD. ADP Employment Change, Goods Trade Balance and ISM Services PMI data will be featured in the US economic docket later in the session. Ahead of the July 4 holiday, the Federal Reserve (Fed) will release the minutes of its June policy meeting.

Fed Chairman Jerome Powell and European Central Bank (ECB) President Christine Lagarde discussed policy outlook at the ECB Forum on Central Banking on Tuesday. Powell noted that the disinflation trend was showing signs of resuming but reiterated that they need to be more confident before reducing the policy rate. Lagarde, on the other hand, said that they were very advanced on the disinlftionary path and added that inflation in the Eurozone was heading in the right direction. Although the USD weakened against its rivals following this event, the currency's losses remained limited. In the meantime, the benchmark 10-year US Treasury bond yield edged lower and Wall Street's main indexes posted strong gains.

Following Wednesday's indecisive action, USD/JPY gathered bullish momentum and touched its highest level in 38 years near 162.00 early Wednesday. 

GBP/USD continues to edge higher and trades within a touching distance of 1.2700 after closing in positive territory on Tuesday. The UK general election will take place on Thursday.

EUR/USD registered small gains on Tuesday and stabilized near 1.0750 early Wednesday. Eurostat will release Producer Price Index data for May and several ECB policymakers will be delivering speeches later in the session. 

The data from Australia showed earlier in the day that Retail Sales rose 0.6% on a monthly basis in May. Meanwhile, Caixin Services PMI in China declined to 51.2 in June from 54 in May. AUD/USD holds its ground following these data releases and trades in positive territory near 0.6700.

Gold failed to make a decisive move in either direction on Tuesday but gathered bullish momentum early Wednesday. At the time of press, XAU/USD was up nearly 0.5% on the day at $2,340.