US dollarThe risk-on sentiment remained at full steam so far this Thursday, in the face of the goodwill gestures exchanged by both the US and China on trade ahead of their early-October trade talks. Asian equities, Wall Street futures, oil and Treasury yields rallied amid signs of easing trade.
The anti-risk Yen suffered the most, as USD/JPY surged past the 108.00 handle to fresh 1.5-month tops.
Heading into the big ECB event, the EUR/USD pair holds steady above the 1.10 handle while the Cable keeps its range above 1.2300, awaiting fresh Brexit clarity.
The main event risk for today remains the ECB monetary policy decision that is likely to spur huge volatility across the forex space. The ECB is widely expected to cut its deposit rate by 10 bps and restart the QE program at the pace of EUR 20 billion per month. Also, a downgrade to the growth and inflation forecasts is expected, as the bloc battles economic slowdown amid trade woes and Brexit uncertainties. The decision will be announced at 11:45 GMT, followed by President Draghi’s press conference
The US docket is also an eventful one, with the US August CPI figures due on the cards at 12:30 GMT alongside the weekly jobless claims and ECB Presser. Also, in focus remains the US Monthly Budget Statement due later in the American afternoon at 18:00 GMT.
Fresh US-China trade developments along with US-Iran geopolitical updates will also continue to provide fodder to the markets.
Oil trims gains as US-China trade optimism-led risk-on cool-off, now the focus is on US-Iran geopolitical tensions and OPEC meeting for fresh direction. Meanwhile, Oil traders will keep an eye on the OPEC JMMC meetings’ outcome for fresh direction.
Gold quickly reversed a dip to $1,489 and rallied back above the key $1,500 psychological mark to hit three-day tops in the last hour. Expectations of further monetary easing by the Fed, which seemed to be one of the key factors driving flows back towards the non-yielding yellow metal. Adding to this, a modest US Dollar pullback from one-week tops, further underpinned demand for the dollar-denominated commodity.