The Pound spent Wednesday absorbing blows from both sides of the Atlantic. Softer than expected UK inflation set a heavy tone in the morning, and Kevin Warsh's hawkish first Federal Reserve (Fed) decision finished the job in the evening.

The Australian Dollar went into Kevin Warsh's first Federal Reserve (Fed) decision as a high-beta currency with no domestic shield, and it paid for it.

Kevin Warsh's first meeting as Federal Reserve (Fed) Chair was billed as a quiet hold, and on the headline rate it delivered exactly that. Everything wrapped around that hold, however, was a hawkish blow to the Euro.

The USD/JPY pair rises near the 160.40 level after the Federal Reserve (Fed) left interest rates unchanged in the 3.50%-3.75% range, as widely expected, in Kevin Warsh’s first policy meeting as Fed Chair.

Cable collapses during the North American session, as the Federal Reserve keep interest rates unchanged, but the ‘dot-plot’ hints at a divided central bank, with half of the eighteen reported dots in the ‘dot-plot’ seeing interest rates higher, which boosted the Greenback.

The Federal Reserve (Fed) left the federal funds rate at 3.50% to 3.75% on Wednesday, but the hold was the least interesting part of Kevin Warsh's first meeting as Chair.

The USD/CHF remains steady on Wednesday as market participants await the US central bank's monetary policy decision, with the Federal Reserve expected to hold rates unchanged. At the time of writing, the pair trades at 0.7932, flattish.

ABN AMRO’s research examines how evolving Federal Reserve policy and Eurozone fundamentals may shape EUR/USD over the coming quarters.

Russia Producer Price Index (MoM) declined to 2.5% in May from previous 6.1%

Russia Producer Price Index (YoY) up to 9.4% in May from previous 5.5%

The Pound Sterling retreats towards 1.3400 on Wednesday after the latest UK inflation report, forcing investors to reassess hawkish bets on the Bank of England, while solid US Retail Sales boost the Greenback, supported by US exceptionalism. The GBP/USD trades with losses of over 0.22%.

The AUD/USD pair trades near 0.7070 with a neutral tone on Wednesday, as the Australian Dollar (AUD) benefits from improved risk sentiment following the latest developments in the US-Iran conflict.

NZD/USD trades around 0.5820 on Wednesday at the time of writing, down 0.24% on the day as investors reduce risk exposure ahead of the Federal Reserve (Fed) monetary policy announcement.

The Japanese Yen (JPY) remains under pressure despite the Bank of Japan’s latest rate hike, with analysts highlighting that the move has not been enough to trigger a sustained  recovery for the Japanese currency.

USD/CAD trades around 1.4010 on Wednesday at the time of writing, gaining 0.10% on the day. The pair maintains a bullish tone as the Canadian Dollar (CAD) remains under pressure from falling Oil prices, while traders position ahead of the Federal Reserve’s (Fed) monetary policy decision.

National Bank of Canada (NBC) analysts discuss the Canadian Dollar, noting that USD/CAD remains range-bound and sensitive to upcoming Canadian and US data releases. They highlight how recent moves have been driven by shifting expectations for Bank of Canada and Federal Reserve policy.

The Euro (EUR) posts moderate losses against the US Dollar (USD) on Wednesday, giving away some of the ground gained over the last few days, with markets showing a cautious mood ahead of the US Federal Reserve’s (Fed) decision.

Societe Generale’s Kit Juckes notes that recent G10 policy moves, including a BOJ hike, have not produced dramatic FX shifts. He argues that a dovish Fed outcome would favour short USD/JPY positions.

The Japanese Yen (JPY) nurses mild gains against the US Dollar (USD) on Wednesday, as the USD/JPY pair eases to 160.20, still above 160.00, considered the limit of tolerable JPY weakness for Japanese authorities.

UOB Global Economics & Markets Research notes that AUD/USD was little changed after the Reserve Bank of Australia paused at 4.35% following three consecutive 25 bps hikes.

Germany 30-y Bond Auction declined to 3.49% from previous 3.62%

Brown Brothers Harriman highlights GBP/USD trading around its 200-day moving average as UK Gilts outperform European bonds.

ING’s FX team notes that a rate hike by the ECB is fully priced into EUR/USD, limiting upside for the Euro. They stress that even additional ECB hawkishness may not translate into Euro gains, as markets already discount tighter policy.

The AUD/USD pair struggles to capitalize on the previous day's hawkish Reserve Bank of Australia (RBA)-inspired bounce and trades with a negative bias for the second consecutive day on Wednesday.

Eurozone Harmonized Index of Consumer Prices (MoM) meets forecasts (0.1%) in May

Eurozone Harmonized Index of Consumer Prices (YoY) in line with forecasts (3.2%) in May

Eurozone Core Harmonized Index of Consumer Prices (YoY) above expectations (2.5%) in May: Actual (2.6%)

Eurozone Core Harmonized Index of Consumer Prices (MoM) unchanged at 0.3% in May

The Australian Dollar (AUD) has entered a corrective phase, surrendering part of its recent gains against the US Dollar, after the Reserve Bank of Australia (RBA) opted to break its tightening cycle and hold its benchmark cash rate at 4.35%. 

Societe Generale analysts observe EUR/USD has rebounded after defending the April low at 1.1500 but see no clear signs yet of a broader uptrend.