US President Trump delivered his most hawkish statement to date with regards to North Korea, threatening to annihilate Pyongyang at the United Nations General Assembly. North Korea has 26 million people. The threat comes after North Korea’s carried a series of intercontinental ballistic missile tests over the past few months. German Chancellor Angela Merkel openly expressed her doubts on this course, saying she will help work towards a diplomatic solution, saying, “anything else would lead to disaster.”
Merkel is expected to be re-elected to a fourth term as Germany's chancellor this Sunday. Today’s big news events comes from the UK Retail Sales at 1030 CET and the US Fed Reserve policy meeting and rate statement release at 2000 CET. The pound is on a bullish run since the BoE strongly clued at a rate hike before the end of the year. In the US, market participants will focus on the Fed’s oversized balance sheet. Earlier in the year, the Fed outlined plans to reduce the balance sheet by not replacing some maturing bonds.
President Trump is approaching his due-date to announce whether he will reappoint Janet Yellen as Fed chair beyond February, when her term ends.
The dollar traded sideways against major rivals on Wednesday as forex investors awaited the outcome of the Federal Reserve's meeting at which it was expected to announce plans to trim its $4.2 trillion in bond holdings.
Markets expect the Fed to say that they will reduce monthly bond purchases starting this October, and also leave the door open for an interest rate hike at their Dec. 12-13 meeting.
USD/JPY edged slightly lower 111.33, but remained within sight of an eight-week peak of 111.88 scaled overnight. On Thursday, the Bank of Japan will announce its own policy verdict, and is widely expected to maintain the status quo as inflation remains tepid despite the modestly recovering economy.
EUR/USD traded higher to 1.2019, moving closer to its Sept. 8 high of 1.2092, its strongest since January 2015, but is unlikely to break any higher ahead of the Fed. GBP/USD broke the 1.3600 level early in European trade.
