Gear up for another volatile day

What you need to take care of on Thursday, October 27:

Another moved journey ended with the American dollar plummeting against its major rivals. The EUR/USD pair reclaimed parity and approaches 1.0100 ahead of the release of the preliminary estimate of the Q3 US Gross Domestic Product and the European Central Bank monetary policy decision.

GBP/USD trades at around 1.1630, despite some fiscal turmoil in the UK. On Wednesday, Chancellor Jeremy Hunt announced the medium-term budgetary plan will be delayed to November 17. The new government is struggling with a fiscal hole of around £35 billion. The delay was discussed with Bank of England Governor Andrew Bailey, according to Hunt. The BOE will announce its monetary policy decision next week, and market players are quickly reducing their bets on another large rate hike.

Meanwhile, news from China indicated that the country put  Wuhan under partial lockdown, where the coronavirus started.

The Canadian dollar was the worst performer vs the greenback. The Bank of Canada hiked its benchmark interest rate by 50 bps, missing the market’s expectation of a 75 bps to 3.75%. Policymakers noted mounting concerns about a potential global economic downturn were behind such a decision. USD/CAD trades around 1.3560.

AUD/USD, on the other hand, surged towards 0.6500, despite worrisome Australian inflation levels.

The USD/JPY pair kept easing, now trading around 146.30, while USD/CHF declined to 0.9864.

Spot gold is up, now at $1,665 a troy ounce, while crude oil prices surged, with WTI changing hands at $88.10 a barrel.

Wall Street closed mixed near its daily opening, trimming early gains. Nevertheless, the greenback remained pressured amid easing government bond yields.

Thursday will be quite a busy day, as the US is expected to report that the economy grew in the three months to September. The preliminary estimate of the Q3 Gross Domestic Product is foreseen at 2.4%, reversing the negative trend from the previous two quarters. It will also mean the country is no longer in a technical recession and could be read as an opportunity for the US Federal Reserve to maintain the aggressive tightening pace, giving the dollar some room to recover. The country will also release September Durable Goods Orders, seen up by a modest 0.6%.

At the same time, the European Central Bank will announce its latest monetary policy decision. The central bank is expected to hike rates by 75 bps, accompanied by a dovish message, as it seems unlikely President Christine Lagarde and Co. will keep raising rates at such an outstanding rate.