Forex Today: Trump's gesture to China improves the mood ahead of the critical ECB decision

Here is what you need to know on Thursday, September 12:

  • The market mood has improved after US President Donald Trump tweeted that he is delaying the new tariffs on China from October 1 to October 15 as a gesture to China that celebrates its national day on October 1. There are reports of Chinese buying of further US agricultural goods. The detente has pushed commodity currencies higher and the yen low, with USD/JPY topping 108. US yields continue their upward drift. 
  • Tension mounts ahead of the European Central Bank's critical decision. The ECB is set to cut rates by 10 or 20 basis points, tweak its forward guidance, and perhaps introduce a new bond-buying scheme worth 30 to 40 billion euros. The deteriorating economic situation in Germany and elsewhere in the euro-zone has been prompting this action. The high level of uncertainty regarding the measures that President Mario Draghi will announce in his penultimate decision may trigger high volatility in EUR/USD.
  • Brexit: Parliament remains suspended despite the Scottish High Court's decision that the government's decision to prorogue the House of Commons is unlawful. The UK Supreme Court will hear appeals to all cases on September 17. PRime minister Boris Johnson has reiterated his stance about leaving the EU by October 31.
  • US inflation figures for August are of interest ahead of the Federal Reserve's critical decision next week. A moderate acceleration from 2.2% to 2.3% is projected for the Core Consumer Price Index.
  • Oil prices have stabilized after falling on Wednesday, as Trump hinted he might remove some of the sanctions against Iran.  OPEC and non-OPEC members meet today to discuss the next steps.
  • Cryptocurrencies are trading marginally lower, with Bitcoin around $10,000.

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