The dollar fell in European trade on Wednesday against a basket of major rivals, extending losses for the third straight session and almost touching three-week lows as US 10-year treasury yields slowed down. 

The decline comes ahead of the crucial US inflation data for March and the release of the Federal Reserve’s last meeting’s minutes, which could provide clues on the future of US interest rates this year.

The Price 

The dollar index fell 0.1% to 104.03 today with a session-high at 104.16.

The Index closed Tuesday down 0.1%, the second loss in a row, marking a three-week trough at 103.88. 

US Yields 

US 10-year treasury yields fell 0.5% on Wednesday away from five-month highs at 4.462%, pressuring the dollar. 

US Rates

The odds of a 0.25% Fed interest rate cut at the June policy meeting currently stand at 56%.

Traders expect two interest rate cuts totaling 50 basis points overall this week, down from 75 basis points in previous forecasts. 

US Inflation

Now investors await crucial US inflation data later today, which could change the odds of future policy moves by the Fed. 

US consumer prices are expected up 3.4% y/y in March, up from 3.2% in February, while core prices are up 3.7%. 

The Fed 

The Federal Reserve will release the minutes of its last meeting later today, at which it held interest rates unchanged at below 5.5%. 

The Fed back then said rushing to cut interest rates isn’t appropriate until there’s enough confidence that inflation is sustainably moving towards 2%. 

 Fed Chair Jerome Powell said back then that if the US economy continued to perform as expected, leaving restrictive policies could be appropriate this year. 

The Fed expects interest rates to reach 4.75% this year, and 4% in 2025, and 3.25% in 2026. 

The New Zealand dollar rallied in Asian trade against a basket of major rivals, extending gains for the third straight session against the US dollar and scaling three-week highs after an expected policy decision by the Reserve Bank of New Zealand. 

As expected, the bank maintained interest rates unchanged for the sixth meeting in a row at 15-year highs. 

The bank maintained its bullish stance and asserted its commitment to restrictive monetary policies until the medium-term inflation targets are achieved, hurting the odds of interest rate cuts this year. 

Prices 

The NZD/USD pair rose 0.3% today to 0.6077, the highest since March 21, with a session-high at 0.6045. 

The pair ended Tuesday 0.5% higher, the second profit in a row on strong risk appetite. 

Best Performing Currency

The kiwi quickly became the best performing major currency today following strong gains against most rivals. 

It rose 0.3% against the US dollar, and a 0.3% against the euro, scaling a four-week high at 1.7857, with a 0.25% profit against the pound to a four-week high at 2.0856.  

It rose 0.3% against the Swiss Franc to a six-month high at 0.5493, and a 0.3% against the yen to a six-week high at 92.25. 

The RBNZ

As expected, the Reserve Bank of New Zealand maintained interest rates unchanged today at 5.5%, already the highest since 2008. 

The RBNZ asserted the importance of achieving the inflation target this year before changing interest rates.

It said that consumer prices remain above the 1-3% target, necessitating the need for maintaining restrictive policies for an extended duration. 

The Saudi government recently announced plans to reduce the scope of the giant city Neom, after the Public Investment Fund’s cash reserves fell to $15 billion in September 2023. 

According to a Bloomberg report, Saudi Arabia is reducing the scope of the giant city, which was supposed to cost $1.5 trillion, and to be 33 times bigger than New York. 

The project included the construction of the innovative “The Line” city, a city constructed alongside a 170 kilometer straight line, with expected habitants of 1.5 million people by 2030, but now authorities expect 300 thousand at most. 

In fact, authorities now expect only 2.4 kilometers of the project to be finished by 2030, with labor shakeup undergone as a result. 

Constructing Neom was aimed at diversifying the economy away from oil and attracting tourists  to the region. 

The Line won’t have cars or lines, and will rely entirely on high-speed trains alongside the city. 

In addition, there were plans to build two mirror buildings, towering at 500 meters, with a width of 120 kilometers as part of the projects. 

Bloomberg sources indicated that authorities continue to support the project overall and its general goals. 

The PIF, which finances the project, hasn’t yet confirmed its 2024 budget for the Neom project. 

Palladium prices rose on Tuesday as the dollar stabilized against most major rivals ahead of important US inflation data.

Investors await the US consumer prices data later this week to gather more clues on the likely path ahead for the Federal Reserve’s monetary policy. 

Palladium is used in cars, especially diesel cars to reduce exhaust fumes. 

However, increased demand on electric cars hurt demand on diesel cars, and in turn hurt palladium demand. 

Palladium prices suffered noticeable losses in 2023 due to lower demand on catalytic converters in cars, which rely on palladium. 

Palladium is a widely available mineral, with 0.015 parts in a million share of the earth’s crust, and it’s usually produced as a byproduct of refining copper and nickel. 

Palladium prices reached a peak of $3440 in March 2022 after the Russian invasion of Ukraine, which curtailed supplies. 

Since then, prices collapsed noticeably to below $1500 as demand on EV cars spike worldwide, threatening the existence of diesel cars and their palladium-based catalytic converters. 

Otherwise, the dollar index stabilized at 104.1 as of 17:33 GMT, with a session-high at 104.2, and a low at 103.8.

Palladium June futures rallied 3.1% as of 17:34 GMT to $1,083.5 an ounce.