US Dollar turns flat ahead of important ECB meeting with all eyes on Lagarde

LONDON (October 17) The US Dollar (USD) adds to gains for a fifth consecutive day when looking at the US Dollar Index (DXY), which can be seen as the benchmark for the Greenback’s performance. China’s Housing Minister said on  Thursday that the country will open a 4 trillion Yuan (CNY) funding to support its domestic housing market, a quite lower number than the initial 6 trillion Yuan communicated on Monday, and adds to momentum for the United States (US) former President Donald Trump to take more lead in the polls in the run-up to the November 5 Presidential Elections day. 

The US economic calendar is full on Thursday. Besides the usual weekly Jobless Claims, Retail Sales and several leading indicators will be released about the US economy and activity. In case that is not enough, the European Central Bank (ECB) is set to deliver another 25 basis point (bps) rate cut according to consensus, with the main question if ECB President Christine Lagarde dares to deliver a hawkish rate cut while Europe’s economic engine, Germany, is severely stuttering. 

Daily digest market movers: ECB and Lagarde on deck

• The US calendar kicks off at 12:30 GMT with a bulk release of data:
  • The weekly Jobless Claims:
    • Initial Claims for the week ending on October 11 are expected to remain stable at 258,000, as the previous week.
    • The Continuing Claims for the week ending on October 4 are expected to increase to 1.87 million from the prior 1.861 million.
    • IT will be interesting to see how the hurricanes in Florida and the Gulf region have influenced the claims numbers. 
  • September Retail Sales:
    • The monthly headline Retail Sales is expected to rise by  0.3%, compared to 0.1% in the previous reading.
    • The monthly Retail Sales, excluding cars and transportation, should grow at a steady pace of  0.1%.
  • The Philadelphia Fed Manufacturing Survey for October is expected to tick up to 3.0, coming from 1.7 in September. 
• At 13:00 GMT, Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee delivers welcoming remarks at the Fifth Annual Exploring Career Pathways in Economics and Related Field Conference.
• At 13:15 GMT, the Fed releases the Industrial Production data for September, which is expected to shrink by 0.2% against the growth of 0.8% seen in August.
• At 14:00 GMT, the National Association of Home Builders (NAHB) will release its monthly Housing Market Index for October. The expectation is for an uptick to 43 against the 41 from September. 
• The European Central Bank (ECB) will release its rate decision at 12:15 GMT, followed by a press conference where ECB President Christine Lagarde will deliver a speech and take Q&A around 12:45 GMT. 
• Equities in Asia are seeing investors being disappointed with a tepid reaction to China's supportive measures on its domestic housing sector. Both Japan’s and China’s equity indices have closed in the red. European equities are doing better with hopes from traders for a rate cut from the ECB, while US futures are trading flat to mildly higher. 
• The CME Fed rate expectation for the meeting on November 7 shows a 92.1% probability of a 25 bps rate cut, while the remaining 7.9% is pricing in no rate cut. Chances for a 50 bps rate cut have been fully priced out. 
• The US 10-year benchmark rate is trading at 4.04% after having flirted with a break below 4% on Wednesday. 

FXStreet