European Central Bank and Draghi in the spotlight
The ECB interest rate decision on Thursday and accompanying press conference offers market participants’ the opportunity to gauge whether sentiment on tighter monetary policy has soured in recent weeks amid a rally in the euro.
The sharp rise in euro to its strongest level against the greenback in two and half years is viewed as an unwelcome problem for ECB policymakers as stronger currencies usually lead to an increase in imports, which tends to weigh on the pace of inflation.
Eurozone inflation in August rose at annualise rate of 1.5% but remained well below the ECB’s target inflation rate of below, but close to, 2%.
EUR/USD traded flat at $1.1913 against the dollar after a recent surge above $1.20.
Fed speakers to seal the dollar’s fate?
The dollar has struggled to pare losses against its rivals over recent weeks as the trend of slowing inflation continues unabated, raising concerns from Fed members over an additional rate hike expected later this year.
Both Minneapolis Federal Reserve Bank President Neel Kashkari and Federal Reserve Governor Lael Brainard struck a dovish tone earlier this week urging the U.S. central bank to delay raising interest rates until the trend of slowing inflation improved.
It remains to be seen whether FOMC members Dudley, Mester and George on Thursday echo their colleagues Kashkari and Brainard’s concerns over further interest rate hikes.
U.S. oil crude stockpiles to snap 9-week streak of falling inventories?
A fresh batch of inventory data from the Energy Information Administration (EIA) on Thursday is expected to show that U.S. crude stockpiles rose for the first time in nine weeks.
Analysts forecast crude inventories rose by about 4.02m barrels in the week ended Sept. 1.
Crude oil prices have rebounded from a tumble last week, as refineries began restarting operations, following disruptions to U.S. refining capacity due to Storm Harvey.
Crude oil futures settled at $49.16, up 1%, on Wednesday.