Forex Today: ECB, Brexit spurred volatility, dollar remains king

FXStreet Team FXStreet

Here is what you need to know on Friday, September 11:

The ECB announced its latest decision on monetary policy, which boosted the shared currency and spurred dollar selling across the board. The central bank left rates and QE unchanged, as widely anticipated, although President Lagarde was mostly optimistic about the economic recovery. Policymakers are aware of the exchange rate, but showed no aims of intervening markets, further fueling EUR demand.

The optimism faded ahead of the US opening, hurt by Brexit woes. Diplomats from the EU and the UK met for emergency talks after PM Boris Johnson announced plans to override parts of the Withdrawal Agreement. Following the discussion, the European Commission said that if the UK adopts the Internal Markets Bill, it would constitute an extremely serious violation of the Withdrawal Agreement and of international law. Even further, they stated that the UK has “seriously damaged trust” and threatened with “legal remedies” to address violations of the legal obligations contained in the text and, if the bill is not amended before month-end. GBP/USD collapsed sub-1.2800.

Further weighing on sentiment, the US Congress was unable to pass a coronavirus relief package. The Senate voted 52-47 to advance the bill but fell short of the 60 votes needed, as Democrats opposed to the bill, claiming it did not include state and local government relief and food assistance.

Also, US House Speaker Pelosi warned that there will be “absolutely no chance” of a US-UK trade deal passing Congress should the UK Government override the Brexit deal.

Wall Street once again fell with tech shares leading the way, and fundamentals exacerbating the slump. The three major indexes lost over 1.0% each. Treasury yields ticked lower during US trading hours but saw little action this Thursday.

Gold prices soared with the ECB but trimmed intraday gains with renewed dollar’s strength during the last trading session of the day. The bright metal closed the day with modest losses around $1,944 a troy ounce. WTI, in the meantime, was dragged south by equities, ending the day around $37.00 a barrel.

Cryptocurrencies succumbed to dollar’s demand, BTC/USD trimmed early gains but holds above $10,000.

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EUR/USD makes a U-turn, focus on 1.1900

EUR/USD’s recovery picks up further pace, prompting the pair to retarget the key 1.1900 barrier amid further loss of momentum in the US Dollar on Wednesday. Moving forward, investors are expected to remain focused on upcoming labour market figures and the always relevant US CPI prints on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.