The risk sentiment remained tepid in Thursday’s trading, amid fresh geopolitical tensions between the US and China. The Chinese People's Liberation Army warned the US to immediately cease such provocative actions to avoid “unexpected events” after guided-missile destroyer USS Wayne E. Meyer reportedly entered South China Waters without China's permission.

A fresh risk-aversion wave gripped the markets on the above reports that added to the ongoing US-China trade woes. As a result, the Wall Street futures and Treasury yields dropped and knocked-off the USD/JPY pair back below the 106.00 handle.

Heading into Europe, the EUR/USD pair trades muted below the 1.11 handle while the Cable consolidates around the 1.22 handle, with the risks skewed to the downside amid growing Hard Brexit risks.

The second half of this week appear quite eventful, in terms of the macroeconomic events, with Thursday’s EUR docket sees relevant releases from both Germany and Eurozone. Germany’s jobs data, due at 07:55 GMT, will be the first watched, followed by a string of Eurozone August Confidence and Sentiment indicators that will drop in at 09:00 GMT.

The German Preliminary Harmonized Index of Consumer Prices (HCPI) for August will hog the limelight in the European session. The HCPI is seen a tad firmer on an annualized basis and is due at 12:00 GMT. In absence of any data from the UK, the Brexit/ political developments will continue to drive the sentiment around the pound.

The NA session also offers a fresh batch of key US economic data, with Preliminary Q2 GDP, Good Trade Balance and Personal Consumption Expenditure Prices, all releasing at 12:30 GMT. Later, at 14:00 GMT, the US Pending Home Sales data will be also eyed amid any fresh US-China trade headlines, the US President Trump’s comments.

The safe-haven gold also picked-up fresh bids above the 1540 level, in the wake of flight to safety. Meanwhile, both crude benchmarks traded flat to lower, with WTI around 55.50 region, off the highs as fears about global demand have replaced optimism from the drop in inventories.