Forex Today: Optimism fade, but dollar bears remain

What you need to take care of on Thursday, October 6:

The dollar made a short-lived comeback on Wednesday, ending the day mixed across the FX board. Risk-off flows returned amid tensions between Europe and Russia, although the sentiment improved during US trading hours as the country released upbeat macroeconomic figures.

 The European Union approved the eighth package of sanctions against Russia, including a price cap on Moscow’s crude oil and refined products. Russia’s Deputy PM Alexander Novak responded by saying his country would be willing to cut production to compensate for price caps, adding an oil price of $70 per barrel would be comfortable.

The United Kingdom is also planning to implement sanctions banning Russian services and limiting exports to the country.

At the same time, OPEC+, alongside key ministers from the involved nations, usually known as the Joint Ministerial Monitoring Committee,  decided a cut oil production by 2 million barrels per day. They also announced they would no longer meet on a monthly basis.

Meanwhile, European Commission President Ursula von der Leyen also announced the Union is ready to discuss a temporary price cap on gas used to generate electricity, while the US White House reported the Department of Energy would release another 10 million oil barrels from the Strategic Petroleum Reserve. Finally, the Biden administration will consult with Congress on tools to reduce OPEC’s control over energy prices.

 The EUR/USD pair currently trades around 0.9890, while GBP/USD trades around 1.1330. The USD/CAD finished the day with losses at around 1.3610, despite resurgent crude oil prices. WTI is now trading at around $87.90.

The AUD/USD pair, on the other hand, trimmed most of its early losses and hovers around 0.6500. USD/CHF is up to 0.9830, while USD/JPY remains pat at around 144.50.

Spot gold met buyers on a dip to $1,700, finishing the day at around $1,716.

Wall Street is mixed, with the Dow Jones Industrial Average posting modest gains, but the S&P500 and the Nasdaq Composite are currently in the red. Finally, US Treasury yields picked up, with the 10-year Treasury note currently yielding 3.75%.

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