Dollar Surrenders Gains Ahead of FOMC Minutes

USD

The dollar index, which measures the greenback against a basket of major currencies, surrendered gains and dropped to 98.97. Market participants are looking forward to the release of the minutes of the last Federal Open Market Committee meeting to grasp hints on the US economic outlook and future path of interest rates. The optimism over trade talks between China and the United States receded, raising the chances of further easing from the Fed as the clashes will continue to weigh on the global economy. The US 10-yr yields dropped to 1.507%, the EURUSD rose to $1.0983, and the GBPUSD recovered to $1.2238.

Equities

Major US stock-index futures finished sharply lower as the hopes of a trade deal between China and the United States faded. The US visa restriction on Chinese officials and the listing of more Chinese companies on the blacklist diminished the chances of reaching a trade agreement. Moreover, President Donald Trump threatened with additional tariffs to come on October 15th if the negotiations fail. The Dow Jones Industrial Average futures dropped to a 26086, the S&P500 futures declined to 2891, and Nasdaq futures dived to 7604.

Metals

Gold prices surged as the latest developments on trade weighed on investors' risk appetite and boosted chances of further easing by the Federal Reserve. A failure in reaching a deal that sets an end to the ongoing trade clash between China and the United States would weigh on the global economic outlook and force central banks to intervene further to support the economies. The price of a gold ounce inched higher towards $1511, the price of silver ounce soared to a two-week high of $17.93, and palladium rallied to $1675.

Oil

Oil prices settled marginally lower as investors await fresh fundamental drivers. Market participants are looking forward to the outcome of the trade talks between the world's largest economies, which will take place on the 10th and 11th of October. On the other hand, the American Petroleum Institute reported a surge in inventories by 4.100 million barrels last week. The US Energy Information Administration will release the official data later on the day. The West Texas Intermediate crude futures and Brent futures closed at $52.56 and $58.14, respectively.

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