ECB announcement and US GDP data may increase volatility

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This is what you need to know to trade today Thursday, October 28:

Market volatility increased in the second half of Wednesday, but the major currency pairs closed not far from their opening levels. Before key events, the risk averse market environment helps the dollar find demand. Meanwhile, short-term US Treasury yields continue to push higher, while 10-year yields are declining, causing a flattened yield curve and supporting the greenback. The European Central Bank (ECB) will announce its political decisions at 11:45 GMT and President Christine Lagarde will deliver her remarks at a press conference at 12:30 GMT. The US Bureau of Economic Analysis will release its first estimate of annualized GDP growth for the third quarter. Pending September home sales and weekly unemployment claims will also appear on the US economic calendar.

Macroeconomic events: Wednesday, Bank of Canada (BoC) left its monetary policy rate unchanged, as expected, but decided to end its quantitative easing program in a surprise move. Additionally, the BoC noted that rate hikes could come earlier than expected. The bullish turn by the BoC triggered a strong rally in the CAD in the short term, with the yield on one-year bonds rising more than 20 basis points. More importantly, this evolution is seen as a sign that the main central banks could obtain support earlier than expected to control inflation expectations.

During Asian trading hours, the Bank of Japan it left its policy adjustments unchanged, but lowered the growth forecast for 2021/22 to 3.4% from 3.8%. “Japan’s consumer inflation is likely to accelerate gradually,” the BoJ reiterated. USD / JPY largely ignored the inaction of the Central Bank of Japan and continues to trade in a tight range below 114.00.

Data from the United States showed on Wednesday that durable goods orders contracted 0.4% in September, improving market expectations of a 1.1% drop. The international trade deficit expanded to $ 96.3 billion from $ 89.4 billion. The US dollar index (DXY) ended for the second day in a row with little variation below 94.00.

The EUR/USD it continues to float around 1.1600 as investors refrain from committing to large positions ahead of the ECB meeting.

European Central Bank Preview: Three Reasons Lagarde May Lower the Euro

GBP/USD it ranges around the 13750 zone as markets await the next catalyst. A strong reaction in the EUR / GBP pair to the ECB could affect the movements of the GBP / USD.

The oro It is testing the $ 1800 zone for the second time this week, but XAU / USD could struggle to make a sustained move unless US GDP data triggers a USD sell-off.

US Q3 GDP Preview: Gold Remains Fragile Barring Negative Surprise

Cryptocurrencies: Bitcoin fell below $ 60,000 for the first time in nearly two weeks and the correction could deepen if buyers do not push the price above that level. Ethereum it appears to be barely holding above 4,000 after losing nearly 5% on Wednesday.

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