RECAP:

 

The greenback was the worst performer of Wednesday’s European sessions as both geopolitical risks and uncertainty over Trump’s fiscal policy resurfaced and managed to drag the single currency down against all majors.  Comments by the Chicago Fed President, Charles Evans, and disappointing readings on JOLTS job openings added further losses to the greenback. On the other hand, the euro was performing the best as the absence of a formal Catalan independence declaration relieved markets which feared possible negative political implications. The Spanish government, though, accused the Catalan leader of causing confusion with his actions.

With the North Korean story getting more complicated and investors worrying that Trump’s feud with Senator Bob Corker would harm his tax plans, the dollar extended its slide against its peers during the session after JOLTS job openings came in below expectations and the Chicago Fed President, Charles Evans, questioned the path of inflation.

Following the Catalan referendum, its leader, Carles  Puigdemont signed the sovereignty of Catalonia but decided to freeze implementation in order to initiate dialogues with the Spanish government, the Spanish Prime Minister, Mariano Rajoy, called Puigdemont on Wednesday to clarify whether Catalonia is considered now independent. This action was said to be the first step over the course of phases (Article 155 or “nuclear option”) needed for the Spanish government to suspend Catalonia’s autonomy and therefore intervene in the running of the region – a measure never been used in Spain or in other European countries.

EURUSD continues to trade upward by 0.4% for the day making a fresh two-week high of 1.1857, while the EURGBP was also up by 0.40% at 0.8976.

As for UK relevant event, The British Finance Minister Philip Hammond, spoke in front of a parliamentary committee on Brexit on Wednesday, admitting that the government is making plans for all possibilities including the “no deal” prospect regarding Britain’s departure and its future relations with the block. In addition, he also argued that currently there will not be any financial commitments in relation to a “hard” Brexit scenarios.

The cable was trading sideways around the 1.3204.

US job vacancies increased by 6.082 million in August, below the 6.140 million seen in July and the 6.125 million anticipated by analysts. It is worth noting that the figure was probably affected by the hurricanes.

Earlier, the Chicago Fed President, Charles Evans, speaking at a Bloomberg event in Zurich on Wednesday, claimed that factors weighing on inflation might not be temporary and it makes him “nervous” when such factors are cited as explanations in inflation forecast surveys. He also said that there is no “harm in waiting longer to take more stock of the inflation situation”. Yet he acknowledged the strength of the US as well as of the global economy.

The FOMC meeting minutes outcome was less than spectacular as the market failed to react to the minutes, with the most While the most dovish FOMC members (Brainard, Evans and Kashkari) are arguing that the Fed should not hike further this year, as low inflation may not be just transitory due to low inflation expectations and labour market slack.

Asian equities open higher, with China markets remains muted ahead of next week’s Communist Party Congress,

In commodities, The monthly OPEC report which was released on Wednesday increased the demand projections for 2018 for the third consecutive time, stating that demand for crude oil would be 33.06 million bpd next year, 230,000 bpd up from the previous forecast. Also, the reported emphasized the high degree of compliance between OPEC and non-OPEC members to curb the oil supply glut.

 

OUTLOOK:

 

Ahead of the day, market participants will focus on a speech by the by the European Central Bank (ECB) President, Mario Draghi. In addition, the former will also be on the lookout for the Euro-zone’s industrial production data for August, slated to release in a few hours. Moreover, the US initial jobless claims and the monthly budget statement for September, both slated to release later in the day, will be on investors’ radar.

TRADER’S VIEW:

 

Ahead of the ECB President’s speech, the EURUSD is expected to find support at 1.1820 with its first resistance at 1.1901 as the greenback is trading in negative territory after minutes of the September FOMC meeting revealed lingering concerns about persistently low inflation.

EURUSD: Break of 1.1832 resistance suggests that the corrective pull back from 1.2091 has been achieved

GBPUSD: Intraday bias in GBP/USD remains neutral for consolidation above 1.3026 temporary low.

USDCAD: USD/CAD’s decline from 1.3793 resumed by taking out 1.3387 and reaches as low as 1.3273 so far. Intraday bias is back on the downside for 1.3222 support next.

USDCHF: Intraday bias in USD/CHF remains neutral for the moment.

USDJPY: Intraday bias in USD/JPY remains on the downside.