ECB Rate Decision and US Producer Inflation Data Set to Fuel Market Volatility

The US dollar stabilized on Wednesday after experiencing bearish pressure earlier in the day. The Treasury Department's announcement to buy up to $6 billion in 10- to 20-year Treasury bonds during its buyback operation contributed to this stability, causing the 10-year US T-bond yield to climb to its highest level since November 2023.

The European Central Bank (ECB) is expected to raise key rates by 25 basis points after their September policy meeting. The ECB will also release revised macroeconomic projections and President Christine Lagarde will deliver the policy statement and respond to questions at a press conference starting at 12:45 GMT. Markets are leaning towards a more hawkish ECB path, with investors pricing in an additional +9.0bps of hikes by the June 2027 meeting.

The US Producer Price Index (PPI) data for July is also expected, with a forecasted rise of 5.3% on a yearly basis. This follows the 4.7% increase recorded in July.