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FX Today: Markets’ attention shifts to Powell and the US shutdown

The US Dollar (USD) climbed further and hit new two-month highs on the back of shutdown concerns and the generalised risk-off theme hovering around the FX galaxy. In the meantime, the FOMC Minutes delivered a cautious tone in general, although they kept signalling that further rate cuts remain in the pipeline.

Here’s what to watch on Thursday, October 9:

The US Dollar Index (DXY) clocked its third consecutive day of gains, challenging its key 99.00 barrier amid an acceptable rebound in US Treasury yields. The probability of a near-term deal around the US shutdown is nearly zero, so the weekly Initial Jobless Claims will surely be postponed once again. In the meantime, investors are expected to closely follow speeches by Chief Powell and his peers Bowman and Barr.

EUR/USD maintained its bearish trend and confronted the 1.1600 region, or six-week troughs. Germany’s Balance of Trade results are due, while the ECB will publish its Accounts. In addition, the ECB’s Lane is due to speak.

GBP/USD dropped below the 1.3400 support on the back of the firmer note in the Greenback. The RICS House Price Balance will only be released across the Channel.

The march north in USD/JPY remained unabated, sending spot to the boundaries of the 153.00 barrier for the first time since mid-February. The weekly Foreign Bond Investment figures are due seconded by Machine Tool Orders.

Despite the firmer US Dollar, AUD/USD managed to print humble gains, although a move past the 0.6600 mark remained elusive. The Melboourne Institute will publish its Inflation Expectations survey.

Prices of the american WTI rose further, hitting multi-day highs near the $63.00 mark per barrel as traders continued to digest the smaller-than-expected output hike by the OPEC+ as well as an unexpectedly larger-than-estimated EIA’s weekly build of US crude oil supplies.

There seems to be no stopping for Gold. That said, prices of the yellow metal climbed to the $4,060 region for the first time in its life propped up by steady bets on Fed rate cuts, political uncertainty in France and the widespread risk-off sentiment. Silver prices rapidly faded Tuesday’s hiccup and surpassed the $49.00 mark per ounce for the first time since April 2011.

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Pablo Piovano

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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