The US dollar is trading relatively flat against many of its major currency rivals. Economic data and the looming Federal Reserve meeting were in focus for investors, with Treasury yields taking a breather. The broader financial markets were quiet, too, as traders take a wait-and-see approach ahead of the two-day policy meeting.

According to the US Census Bureau, retail sales tumbled 3% in February, worse than the median estimate of -0.5%. This is down from the 7.6% surge in January. It also represented the biggest decline since April, driven by a blast of wintry weather. The slump in retail trade was concentrated in department stores, automobile dealers, health care services, and e-commerce. The only gains that were reported were at gasoline stations.

On an annualized basis, retail sales advanced 6.3% last month.

Trade prices edged higher year-over-year in February. Export prices climbed 5.2%, while Import Prices increased 3%. On a monthly basis, they rose higher than the market forecasts, with import prices rising 1.3% and export prices jumping 1.6%.

The economy’s industrial and manufacturing sectors contracted in February. Industrial output declined 2.2%, and manufacturing production fell 3.1%. Capacity utilization slipped to 73.8%, falling short of the expectation of 75.5%. Business inventories matched market forecasts of 0.3%.

On the housing front, the National Association of Home Builders (NAHB) index slid two points to 82 in March, the lowest reading in seven months. The drop is being attributed to rising interest rates and higher building materials cost.

The US central bank’s Federal Open Market Committee (FOMC) initiated its two-day policy meeting on Tuesday. It is widely expected to leave interest rates unchanged and maintain its aggressive quantitative easing campaign. However, investors are waiting for guidance from the Eccles Building and seeing how Fed Chair Jerome Powell reacts to inflation, bonds, and the economic recovery.

A new Bank of America survey found that traders are no longer worried about the coronavirus pandemic. Instead, they are more fearful of inflation and the Fed. Since the beginning of the COVID-19 public health crisis, this is the first time that the investment community has bigger worries than the highly infectious respiratory illness.

Meanwhile, the bond market is mostly in the red, with the benchmark 10-year Treasury yield dipping 0.017% to 1.59%. The one-year bill dropped 0.002% to 0.074%, while the 30-year bond decreased 0.019% to 2.35%.

The US Dollar Index (DXY), which gauges the greenback against a basket of currencies, edged up 0.05% to 91.88, from an opening of 91.83. The index has enjoyed a terrific first quarter in 2021, defying the bearish Wall Street consensus and rising 2.2%.

The USD/CAD currency pair fell 0.05% to 1.2468, from an opening of 1.2472, at 14:30 GMT on Tuesday. The EUR/USD tumbled 0.15% to 1.1913, from an opening of 1.1930.

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Post tags: Bonds, Coronavirus, Dollar, EUR/USD, Export Prices, Federal Reserve, FOMC, Import Prices, Industrial Production, Interest Rates, Jerome Powell, Manufacturing, Retail Sales, United States, USD/CAD

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