Forex Today: US Dollar stabilizes ahead of producer inflation data, Powell speech

Here is what you need to know on Tuesday, May 14:

The action in foreign exchange markets remain quiet following Monday's subdued trading. The US Dollar (USD) Index continues to fluctuate in a tight channel above as investors await producer inflation data for April and Federal Reserve Chairman Jerome Powell's speech. Earlier in the day, the European economic docket will feature ZEW Survey results for Germany and the Euro area.

The benchmark 10-year US Treasury bond yield ended the first trading day of the week flat and main equity indexes closed little changed. The Producer Price Index (PPI) is forecast to rise 0.3% on a monthly basis in April following the 0.2% increase recorded in March. In the early American session, Chairman Powell will appear at a moderated discussion with De Nederlandsche Bank (DNB) President Klaas Knot at the Foreign Bankers' Association's Annual General Meeting in Amsterdam.

EUR/USD climbed above 1.0800 on Monday but erased a small portion of its daily gains in the American session to close below this level. Early Tuesday, the pair fluctuates in a narrow channel at around 1.0780.

USD/JPY rose 0.3% on Monday and continued to push higher toward 156.50 early Tuesday. Japanese Finance Minister Shunichi Suzuki repeated on Tuesday that it is important for currencies to move in a stable manner, reflecting fundamentals. He added that they will closely monitor the foreign exchange moves. Earlier in the day, the data from Japan showed that the PPI rose 0.9% on a yearly basis in April, matching the market expectation and March's increase.

Meanwhile, the International Monetary Fund (IMF) said that Japan's commitment to allowing the Japanese Yen (JPY) to move flexibly would let the Bank of Japan (BoJ) focus on achieving price stability and warned against the call by certain experts to use monetary policy to limit the currency's depreciation, as reported by Reuters.

The UK's Office for National Statistics reported on Tuesday that the ILO Unemployment Rate edged higher to 4.3% in the three months to March from 4.2% as expected. The Claimant Count Change rose 8.9K, while the Employment Change was down 177K in April. Additionally, Average Earnings Excluding Bonus rose 6% (YoY) in the three months to March, while Average Earnings Including Bonus were up 5.7% (YoY) in the same period. GBP/USD showed no immediate reaction to these data and was last seen moving up and down in a narrow band at around 1.2550.

Gold staged a downward correction and lost about 1% on Monday. XAU/USD edged higher early Tuesday but remains below $2,350.