Forex Today: GDP releases from major economies, BoC and Fed rate decisions to ramp up volatility

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

Financial markets turn relatively quiet early Wednesday as investors gear up for key events. In the European session, preliminary second-quarter Gross Domestic Product (GDP) from the Eurozone will be watched closely. The US economic calendar will feature ADP Employment Change for July and Q2 GDP data. More importantly, the Bank of Canada (BoC) and the Federal Reserve (Fed) will announce monetary policy decisions.

Following Monday's impressive rally, the US Dollar (USD) Index preserved its bullish momentum and touched its highest level since late June above 99.00 on Tuesday. Early Wednesday, the USD Index corrects lower and fluctuates at around 98.80. In the meantime, US stock index futures trade mixed, reflecting a cautious market stance. The Fed is widely anticipated to maintain policy settings after the July meeting. The statement language, and comments from Chairman Jerome Powell could influence market expectations for a rate reduction in September and drive the USD's valuation.

Although no major breakthroughs were announced following two days of talks between Chinese and US officials in Stockholm, both sides noted that the meetings were constructive. According to Reuters, officials have agreed to seek an extension of the 90-day tariff truce. US Treasury Secretary Scott Bessent said that President Donald Trump will decide whether to extend the truce period.

In the Asian session, the data from Australia showed that the Consumer Price Index (CPI) rose by 0.7% on a quarterly basis in the second quarter. This reading followed the 0.9% increase recorded in the first quarter and came in below the market expectation of 0.8%. AUD/USD stays under modest bearish pressure after posting losses for four consecutive days and trades near 0.6500.

USD/CAD climbed to its highest level in five weeks near 1.3790 on Tuesday before going into a consolidation phase. The BoC is widely expected to keep the policy rate unchanged at 2.75%.

EUR/USD holds steady at around 1.1550 in the European morning on Wednesday after declining sharp to start the week. The data from Germany showed that the GDP expanded at an annual rate of 0.4% in the second quarter, coming in better than the market expectation of 0.2%.

GBP/USD trades in a narrow channel above 1.3350 after posting small losses on Tuesday.

After struggling to find direction on Tuesday, USD/JPY stays under bearish pressure on Wednesday and trades in negative territory at around 148.00.

Following a four-day slide, Gold staged a rebound and gained about 0.4% on Tuesday. XAU/USD holds steady near $3,330 in the European morning.