Gold Steady as Markets Anxiously Await FOMC Rate Statement

Gold is showing limited movement on Wednesday, continuing the trend seen in the Tuesday session. XAU/USD is trading at $1283.95 in the North American session. On the release front, today's highlight is the FOMC rate statement, with the markets expecting the Federal Reserve to maintain the current benchmark rate of 0.25%. Will we see some movement from gold after the Fed announcement? There was positive news out of the US earlier in the day. PPI came in at 0.4%, beating the estimate of 0.3%. As well, the Empire State Manufacturing Index was unexpectedly strong, with a reading of 6.0 points. US Crude Inventories continued to decline, with a reading of -0.9 million.

EUR/USD – Euro Resumes Slide, Markets Eye Fed Rate Statement

EUR/USD has posted considerable losses on Tuesday, erasing the gains which marked the Monday session. The pair is trading slightly above the 1.12 level. On the release front, Eurozone Employment Change Industrial Production. Both indicators beat their estimates. In the US, today's highlights are Core Retail Sales and Retail Sales. The estimate for both reports stands at 0.4%.
All eyes are on the Federal Reserve's policy meeting, which will conclude with a rate statement on Wednesday. The markets have written off a rate hike in June, while a July move remains unlikely, according to the CME Group. The chances of a June hike are just 1.9% compared to a 26.3% in May. The chances of a July hike is 17.9%, compared to 43.2% in May. The sharp drop in market sentiment for a rate hike can be attributed to the dismal US Nonfarm Payrolls report as well as some back pedaling by Fed over the past few weeks.

USD/JPY – Yen Edges Lower, Fed Rate Statement Looms

The Japanese yen has edged lower, as the yen continues to show limited movement. USD/JPY is slightly below the 106 line. On the release front, Japanese Revised Industrial Production slipped to 0.5%, within expectations. In the US, today’s highlights are Core Retail Sales and Retail Sales. The estimate for both reports stands at 0.4%.
USD/JPY continues to show little movement, but the yen has recorded strong gains against the euro and the British pound. EUR/JPY and GBP/JPY are at 3-year lows, in response to continuing uncertainty over the Brexit referendum, as the “Leave” camp has gained strength in recent polls.

US Retail Sales Rise Again in May

In US retail sales rose by a stronger than expected 0.5% in May 2016 (compared to market expectations for a 0.3% increase) to build on a strong April gain.

Excluding the auto sector, sales rose by 0.4% with 'control' sales (retail sales ex-autos, gas stations, and building material stores) also posting a 0.4% increase that built on an outsized 1.0% jump in April.