Here is what you need to know on Thursday, October 10:
- Trade headlines are whipsawing markets. The US is considering a pact that includes a currency pact to control the yuan, Chinese buying of agricultural goods, exemptions from sanctions against Huawei, and more. That would be a partial accord. The market mood is more upbeat than in previous days. Commodity currencies are on the rise, the yen is under pressure, while the euro and the pound seem unaffected. China’s Vice Premier Liu He will meet US Trade Representative Robert Lighthizer will meet today. Reports that the large Chinese delegation will leave early have been brushed aside.
- The Federal Reserve’s meeting minutes have shown that several officials pushed for signaling when the rate cut cycle will stop, while others have noted that models have shown higher odds of a recession. The general view that the US economy is doing well while headwinds come from abroad prevails. Consumer Price Index (CPI) figures for September will be closely watched later today.
- The Financial Times has reported that European Central Bank President Mario Draghi ignored in-house advice when pushing to restart Quantitative Easing. The leak of this advice is part of an ongoing struggle within the ECB to shape future monetary policy under Christine Lagarde, which takes over from Draghi on November 1. The ECB Meeting Minutes are due out today and may reveal further divisions.
- Brexit: UK Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar will meet later today to try to break the deadlocks. They will try to find a solution that keeps an open border in the Isle of Ireland while taking the UK out of the single market and customs union – a difficult task. The acrimony between the EU and the UK was exposed again on Wednesday as Chief EU Negotiator Michel Barnier said that “we are not in a position to reach a deal.” The UK Parliament will sit on Saturday, October 19, just after the critical EU Summit. GBP/USD remains prone to headlines and will likely ignore monthly UK Gross Domestic Product (GDP) figures for August. Bank of England Governor Mark Carney will launch a new £20 banknote later today.
- Turkey invaded areas in Northern Syria and clashes with the Kurds. The news keeps the Turkish Lira under pressure while oil prices are shrugging it off.
- Cryptocurrencies are consolidating their gains with Bitcoin holding above $8,500. Digital coins maintain their strength despite news that the US Securities and Exchanges Commission (SEC) rejecting a request for a Bitcoin Exchange Traded Fund (ETF).