Forex Today: Markets turn cautious ahead of key US data

This is what you need to know to trade today Wednesday October 5:

After two days of recovery of risk appetite, markets seem to have turned cautious in the middle of the week. The DXY dollar index, already down more than 1.5% so far this week, remains relatively calm above 110.00 early Wednesday and the 10-year US Treasury yield is holding steady. around 3.6%. The report on ADP Private Sector Employment and ISM Service Sector PMI Survey for September, together with the merchandise trade balance data for August. The European Union is expected to publish the details of the new sanctions against Russia that include capping the price of oil.

Watch: ADP Employment Preview: How Data Creates Selling Opportunity Around Dollar Ahead of Services PMI ISM

Market participants will also be attentive to the news that comes out of the meeting of the OPEC+. News suggesting the group could cut output by as much as 2 million barrels a day sent oil prices higher late on Wednesday. the barrel of West Texas Intermediate (WTI) rose nearly 4% on Tuesdayafter Monday’s 5% rise, and is now trading one step above $87.

Reflecting the cautious tone in markets, US stock index futures are down 0.4%-0.5% early on Wednesday. The rising geopolitical tensions seems to weigh on the feeling of risk. In response to Washington’s decision to send more military aid to Ukraine, Russia’s ambassador to the US said earlier in the day that the danger of a direct clash between Russia and the West had increased.

During the Asian session, the Reserve Bank of New Zealand has announced that it had raised its interest rate by 50 basis points (bp), down to 3.5%, as expected. The central bank said the committee had considered raising the rate by 50 or 75 basis points before settling on 50 basis points to maintain price stability and contribute to maximum sustainable employment. As an initial reaction, NZD/USD rose above 0.5800 for the first time since September 23, but pulled back towards 0.5750 amid risk aversion.

The EUR/USD posted impressive gains on Tuesday and tested parity before entering a consolidation phase. At time of writing, the pair is trading sideways near 0.9980.

The GBP/USD closed on Tuesday the sixth consecutive day in positive territory and touched its highest level in almost three weeks, at 1.1490. The pair is trading in a tight range above 1.1450 early on Wednesday.

After gaining more than 2% on Monday, the Prayed It maintained its bullish momentum amid falling global bond yields and broke through $1,700 on Tuesday. XAU/USD has already risen 4% this week and is now trading above $1,720.

The USD/JPY dipped Tuesday on relentless dollar selling but found support near 144.00. The pair remains in positive territory near 144.20 early on Wednesday. Japanese Prime Minister Fumio Kishida said on Wednesday that it is important to link the yen’s weakness to economic recovery through the reopening of inbound tourism and corporate relocation.

The Bitcoin it rose nearly 4% on Tuesday and rebounded to $20,000 before entering a consolidation phase slightly above that level on Wednesday. The ethereum It is up more than 6% this week and is trading around $1,350 in European morning trading.