News

Euro Clinches Higher ahead of ECB Decision

EUR

The Euro gained ground against rivals ahead of an anticipated monetary policy meeting. The bank is likely to keep policy settings unchanged. However, investors will be looking for answers for the impact of the Euro appreciation on the economic recovery, and how will the ECB respond to the negative print in inflation. The ECB still has room in its PEPP, which can utilize to reach its objectives instead of lowering interest rates. The EURUSD recovered to $1.1837, the EURJPY rallied to 125.62, and the EURGBP extended gains trading at 0.9103.

Dollar

The dollar index, which measures the greenback against a basket of major currencies, eased to 93.05, as investors await clarification from the ECB's meeting. The ECB Chief Economist Lane stated last week that they don't look at the exchange rate, but the 1.20 level against the dollar matters.  His statements raised investors' interest in how Christine Lagarde will address the recent rise in euro value. The Euro and Pound account for almost 70% of the dollar index basket. Therefore, a fresh dovishness for the outlook of these two currencies could make the dollar more appealing to investors.

Equities

Major US stock-index futures rebounded sharply following a sharp sell-off started last week. The soaring technology stocks raised concerns over a bubble in the tech sector, triggering profit-taking, and leading to a significant plunge. However, yesterday top tech companies managed to recover, boosted the appetite towards risk. The Dow Jones Industrial Average futures rose to 28061, the S&P500 futures raced higher to 3410, and Nasdaq futures hovered around 11454.

Metals

Gold prices edged higher as the dollar dipped along with US yields. The US 10-year yields declined to 0.68%, and the dollar easing, making room for gold to rally to $1950. Meanwhile, the price of a silver ounce hovered around $27, and palladium futures held steady above $2300.

Oil

Oil prices rebounded, trimming previous losses, supported by the general risk-on sentiment. Market participants are looking forward to the inventories report from the US Energy Information Administration later today. The West Texas Intermediate crude October delivery rose to $38.15, and Brent November delivery rallied to $40.95.

Major Economic Events

GMT Country Event Expectation Previous

11:45

EZ

 ECB Interest Rate Decision (Sep)

0.00%

0.00%

12:30

EZ

 ECB Press Conference 

-

-

12:30

US

 Initial Jobless Claims

838

881

12:30

US

 PPI (MoM) (Aug)

0.2%

0.6%

15:00

US

 Crude Oil Inventories

-1.887

-9.362

16:30

CA

BOC Gov Macklem Speaks

-

-


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