USD Takes a Break, Tonight US Data Is the Focus!

<p>&nbsp;European session markets saw the US dollar trade slightly lower, while the pound gained on the back of higher wage growth in the UK.</p><p><br /></p><p>A sharp rise in average UK incomes in the second quarter of June saw fears of inflation rise again, pushing the pound to trade higher around 1.2700 against the USD.</p><p><br /></p><p>Meanwhile, the yuan weakened to a 9-month low after China's central bank cut interest rates to support a recovery following a series of gloomy economic data.</p><p><br /></p><p>To curb the fall of the yuan, major state-owned banks reportedly sold US dollars in the Asian session.</p><p><br /></p><p>The dollar index, which measures the greenback's performance against six major currencies, declined slightly with prices hovering around 103.07 in the European session.</p><p><br /></p><p>Investors are now focusing on the release of US retail sales data in the New York session to determine the future direction of the giant currency.</p><p><br /></p><p><br /></p><p>Risk-sensitive currencies, the Aussie and New Zealand dollars continued to trade bleakly at 9-month lows against the US dollar following gloomy data from Australia and China.</p><p><br /></p><p>In addition, the yen remains stuck at its weakest level since November last year despite the latest data showing Japan's economy growing at a solid 6% in the second quarter of 2023.</p><p><br /></p><p>The euro currency, on the other hand, struggled to register an increase by trading stable at around the price of 1.0925 against the US dollar.</p><p><br /></p><p>Elsewhere, the Canadian dollar slipped to a two-month low against the greenback ahead of the release of Canadian inflation data tonight.</p><p><br /></p><p>Separately, the Russian ruble rallied again after Russia's central bank raised its key interest rate by 350 basis points to 12% from 8.5%.</p><p><br /></p><p>The emergency move was made at a surprise meeting on Tuesday evening after the ruble plunged past 100 against the dollar.</p>