Eurozone industrial production, Fed speeches to watch

The dollar remains on top against a basket of currencies for a third consecutive day, rising to a new 20 year high against the Japanese yen on Wednesday morning. In the coming months, the yen weakness will probably deliver a tremendous inflationary impulse into the Japanese economy, with the risk that the Bank of Japan will underestimate the wave that will hit it.

On Wednesday, traders put Japan's ultra-easy monetary policy settings to the test as they weighed the fallout from China's pandemic lockdowns while oil and stock markets were under pressure.

After the IMF downgraded the US economy by only 0.3% to 3.7%, yields ended up moving up on increased inflation concerns, with expectations that the US economy has recovered from the most severe effects.

China's LPR left unchanged

China left its five-year and one-year Loan Prime Rates (LPR) unchanged, disappointing markets looking for a more comprehensive stimulus package in its latest announcement. The PBOC announced today some measures to assist homeowners and small businesses and establish a weaker CNY-USD exchange rate.

Yuan hit its lowest level since October after the central bank pledged support for the services sector. However, it was volatile as China also surprised and disappointed equity investors by not reducing lending rates.

Oil covered some losses

As a result of last week's drop in US crude inventories, and the strong demand from the world's largest consumer, oil prices rebounded Wednesday.

API data showed a decrease of nearly 4.5 million barrels for the week ended April 14, reversing the 7.8million-barrel rise reported the previous week.

Events of today

With the China LPRs out of the way, the European data calendar is now quiet. It will centre around the Eurozone industrial production for February, with the annual figure expected to rebound to 1.5% and a drop of 1.3% the previous month.

Existing home sales will be released later in the US session. It can have a downside risk as 30-year mortgage rates have reached record highs.

The Federal Reserve releases its Beige Book today. Still, more attention is likely to be paid to the bid-to-cover ratio of the US bond auction for 20-year bonds. In the event of a weak bid-cover, US yields are likely to rise once again.

Evans and Daly from the Federal Reserve will speak tonight, introducing some more hawkish upside risks.

The US Energy Information Administration is also due to release crude oil supply data later today.