USD Flat as Markets Eye US CPI Inflation and Question Trade Deal Impact

USD Holds Steady Ahead of Key US CPI Data Amid Trade Deal Skepticism

Muted USD Reflects Investor Uncertainty Ahead of Inflation Print

The US Dollar (USD) is trading mostly flat across major currencies on Wednesday, as investors stay cautious ahead of the May US Consumer Price Index (CPI) report due at 8:30am ET. Markets have largely discounted the conclusion of the US-China trade negotiations, viewing the outcome as tentative and lacking in detailed implementation commitments.

US-China Trade Deal Viewed With Skepticism

Though a framework agreement has been reaffirmed between the US and China—built upon commitments outlined in May—investors remain unconvinced about its longevity. The lack of clear, enforceable details has dampened enthusiasm, contributing to a subdued tone in the currency and equities markets.

Currency Market Snapshot

USD is stable across G10 currencies, with no major directional moves.
MXN is the best performer, supported by revised expectations around Banxico’s policy stance, which is now perceived as less dovish.
AUD and NZD are under slight pressure after Asian headlines on trade and a US Court of Appeals ruling that favored continued US tariffs.
Other G10 currencies have recovered from early-session losses, trading largely flat against the USD.

Commodities and Market Sentiment

Oil prices are well supported, with WTI crude trading above $65/bbl, continuing its rebound from spring lows.
Copper prices are weakening, signaling potential exhaustion after a strong rally in May.
Gold continues to consolidate, lacking momentum, and remains within a tight trading range since hitting record highs in late April.
US equity futures are slightly below recent highs, and US 10-year yields are rising modestly toward 4.50%.

What to Watch

The key short-term driver remains the May CPI inflation data, with potential market volatility depending on whether the reading supports the case for rate cuts by the Federal Reserve later this year.