Euro Higher On the Back of Better German IFO

Sentiment improved after German IFO came out above consensus. ECB Yves Mersch rejected expectations of ECB rate cut. Gold and silver recover after sharp losses during Asian session. Market turns to US New Home sales and Dallas Fed Manufacturing index. Arabic speakers can watch Ashraf on AlArabiya discussing gold and silver at 12:30 GMT (16:30 Dubai Time)

Overall sentiment has improved and risk currencies are rallying after September German IFO business climate came out at 107.5 compared to 106.5 expected. Other components of the IFO index also came above expectations Current assessment printed 117.9 vs 115.7 exp. and the Expectations part came out at 98 vs. 97.3. However, it is important to keep in mind that all three components worsened slightly compared to August readings confirming negative outlook. EURUSD has recovered to 1.3476 after falling to 1.3363 at the beginning of European trading. Other European news included Italian Consumer confidence that declined in September to 98.5 from 100.3.

Additional support for the common currency came from the ECB governing council member Yves Mersch who in an interview for MNI rejected speculations of 50 bp rate cut. Yves Mersch said that those were "wild expectations" that show that "people have lost their sense of direction".

Gold and silver surged higher over the past few hours. Gold gained almost 100 dollars when it recovered to 1626 after falling to 1533 while silver surged higher by almost 4 dollars when it reached 30 after falling to 26.10.

During the US session, the volatility could increase at 9:15 am ET when Federal Reserve governor and FOMC member Sarah Raskin delivers a speech on monetary policy in Washington DC.

August New Home Sales are due at 10:00 am ET and are seen lower at 296K from 298K in July. Despite the stabilization seen over the past 2-3 years, the sales of single family homes are still near decade lows.

Dallas Fed Manufacturing Activity index is due at 10:30 am ET and is expected to slow the rate of decline and print -8 in September from -11.4 in August.