FX Markets Remained Cautious as US-China Trade Talks Resume

Daily Update - 10th October 2019

Yesterday’s Focus

• USD Fed Powell Speech, FOMC minutes

Yesterday’s Explained

A quick read of the Fed minutes from its September meeting showed that some Federal Open Market Committee (FOMC) members expressed concern that the financial markets may be expecting more rate cuts than the central bank will deliver. As of Wednesday’s, close, traders were pricing a 93.5% chance of a rate cut at the end of October, following cuts in July and September. The financial markets are also predicting more reductions in 2020.

 

Today’s Market

• EUR ECB monetary policy meeting accounts

• USD consumer price index ex food and energy

Today’s Focus

It’s a relatively quiet day ahead on the Eurozone economic calendar. German trade data for August is due out ahead of the European open. Following a mixed set of stats earlier in the week, we can expect the figures to influence going into the open.

With the lingering threat of U.S tariffs on EU goods, Germany’s economy would be hard hit from such an eventuality. From the U.S, September inflation figures are also due out but will likely have a muted impact on the majors, barring a material pickup in inflationary pressure.

Outside of the stats, expect updates from Brexit and U.S – China trade talks to also influence on the day. We would expect market sensitivity to the U.S – China trade talks to be greatest over the course of the session. Further tariffs on Chinese goods are due to be rolled out next week and at the end of the year.