Forex Today: Eyes on inflation data on last day of Q3

Here is what you need to know on Friday, September 30:

The greenback came under heavy selling pressure and the US Dollar Index (DXY) closed the second straight day in negative territory, losing over 2% in that period. Markets stay relatively quiet early Friday as investors await the HICP inflation data from the euro area and the Personal Consumption Expenditures (PCE) Price Index figures from the US. Ahead of the weekend, the University of Michigan (UoM) will release the final version of its Consumer Sentiment Index for September. On the last trading day of the third quarter, position readjustments and profit taking could ramp up the market volatility in the second half of the day. 

Earlier in the day, the data from China showed that the NBS Manufacturing PMI recovered slightly above 50 in September and the Non-Manufacturing PMI edged lower to 50.6 from 52.6 in August. The Shanghai Composite Index failed to stage a rebound after these data and closed in negative territory. 

Meanwhile, the market mood remains cautious ahead of the above-mentioned data releases. US stock index futures trade mixed and the 10-year US Treasury bond yield fluctuates in a tight range above 3.7%. The DXY stays in positive territory slightly above 112.00. 

EUR/USD climbed to a fresh weekly high above 0.9830 early Friday but lost its bullish momentum. The pair was last seen posting small daily losses at around 0.9800. Annual HICP inflation in the euro area is expected to rise to 9.7% in September from 9.1% in August. On Thursday, Germany's Destatis reported that the annual Consumer Price Index jumped to 10% in September, surpassing the market expectation of 9.4%.

GBP/USD continued to gather bullish momentum on Thursday and gained more than 200 pips. The UK's Office for National Statistics announced on Friday that the Gross Domestic Product expanded by 4.4% on a yearly basis in the second quarter, surpassing the market expectation of 2.9% by a wide margin.

USD/JPY extended its sideways grind below 145.00 for the third straight day on Thursday. The pair stays directionless in its weekly range early Friday. The data from Japan revealed that the Consumer Confidence Index declined to 30.8 in September from 32.5 in August but this print failed to trigger a noticeable market reaction.

Gold capitalized on falling US Treasury bond yields and advanced to the $1,670 region in the early European session on Friday. 

Bitcoin managed to stage a modest rebound on Thursday but lost its momentum before testing $20,000. Ethereum continues to move up and down in a narrow band at around $1,300 on Friday.