Dollar gained all through the three major sessions yesterday, but a combination of EM currencies collapsing and escalating tensions between the US and China, has halted the Dollar’s rally. Dollar erased most gains and traded near the midpoint of the 111.50 against the Yen, while both the EUR and the GBP bounced back from yesterday’s lows, awaiting fresh push from the Markit services PMI releases due later today.
Euro calendar remains quite busy today, with Markit final services PMI from the Euro area economies to start trickling in from 07:15 GMT. The main market mover for the EU session is expected to be the UK services PMI release due at 08:30 GMT. Also, in focus remains the Eurozone retail sales data that will be reported at 09:00 GMT, followed by the ECB Chief Economist Peter Praet’s speech scheduled at 09:30 GMT.
In the NA session, the main event risk for traders remains the Bank of Canada (BOC) rate decision due to be announced at 14:00 GMT. The US has little to offer, but multiple Fed’s speakers will hit the wires with the FOMC members Williams and Kashkari due to speak at 19:00 GMT and 20:00 GMT respectively.
Oil prices fell on Wednesday as a tropical storm hit the U.S. Gulf coast with high winds and heavy rain, but the impact on production was not as strong as initially expected. Prices had jumped the previous day as dozens of U.S. oil and gas platforms in the Gulf of Mexico were shut in anticipation of damage from tropical storm Gordon. Emerging markets are a key driver of global oil demand growth, but several of them – especially Turkey and Argentina but also Indonesia and South Africa – have seen their currencies and stock markets come under pressure in recent months amid inflation, a strong U.S Dollar and escalating global trade disputes. The API weekly crude stockpiles report will be published at 20:30 GMT.
Gold prices rose on Wednesday morning in Asia, driven by the ongoing currency crisis in Argentina, which economists expect could lead to a recession, a weaker peso and higher inflation. With a number of emerging markets including Argentine, Turkey and Indonesia battling currency crises, the demand for gold, which is widely seen as a safe haven asset, is likely to rise.