Forex Today: US Dollar selloff resumes after short reprieve, eyes on BoC and Powell

Here is what you need to know on Wednesday, April 16:

Following a meager recovery on Tuesday, the US Dollar (USD) comes under renewed selling pressure on Wednesday as markets assess the latest news on trade wars. March Retail Sales and Industrial Production data will be featured in the US economic calendar. Additionally, the Bank of Canada (BoC) will announce monetary policy decisions. Finally, Federal Reserve Chairman Jerome Powell will be delivering a speech in the late American session.

Bloomberg reported late Tuesday that US President Donald Trump launched a probe into the need for tariffs on critical minerals, the latest move in an escalating trade war that has targeted key sectors of the global economy. In the meantime, citing individuals familiar with the discussions, the Wall Street Journal said the Trump administration plans to use ongoing tariff negotiations to pressure US trading partners to limit their dealings with China. Markets seem to have adopted a cautious stance following these developments. At the time of press, US stock index futures were down between 0.6% and 2%, while the USD Index was losing more than 0.5% on the day at 99.55.

The UK's Office for National Statistics reported early Wednesday that annual inflation, as measured by the change in the Consumer Price Index (CPI), edged lower to 2.6% in March from 2.8% in February. In the same period, the core CPI was up 3.4%, as expected. GBP/USD largely ignored these numbers and was last seen trading at its highest level since October above 1.3250.

USD/CAD gained traction and rose about 0.6% on Tuesday after Statistics Canada reported that the CPI rose by 2.3% on a yearly basis in March, compared to the market expectation of 2.6%. Later in the day, the BoC is expected to hold its policy rate unchanged at 2.75%. Ahead of the BoC event, USD/CAD trades in negative territory slightly below 1.3950.

After falling more than 0.5% on Tuesday, EUR/USD reversed its direction during the Asian trading hours on Wednesday and rose above 1.1350. Eurostat will release final revisions to March inflation data and the European Central Bank will announce policy decisions on Thursday.

Bank of Japan (BoJ) Governor Kazuo Ueda said early Wednesday that the central bank may need to take policy action if US tariffs hurt the economy. USD/JPY declines sharply midweek and trades near the multi-month low it touched at 142.05 in the previous week.

The data from China showed earlier in the day that the Gross Domestic Product expanded at an annual rate of 5.4% in the first quarter. This reading matched the expansion rate of the previous quarter and came in above the market expectation of 5.1%. After closing the fifth consecutive day in the green, AUD/USD stays in a consolidation phase at around 0.6350 on Wednesday. In the Asian session on Thursday, employment data from Australia will be watched closely by market participants.

Following the sideways action seen on Monday and Tuesday, Gold benefited from the risk-averse market atmosphere in the Asian session on Wednesday. At the time of press, XAU/USD was trading at a new all-time high slightly below $3,300.