Comey testifies and the ECB meets: Here’s what could drive the market on Thursday

As stocks hovered just below record highs on Wednesday, Boris Schlossberg, BK Asset Management's managing director of foreign exchange strategy, breaks down three market themes he is watching for on Thursday in a trading session full of key political events that could rattle the markets.

1. Comey testifies

Former Federal Bureau of Investigation Director James Comey is set to testify Thursday before the Senate intelligence committee about his interactions with President Trump and the possible links between the Trump campaign and Russian efforts to interfere in last year's presidential election. Trump abruptly fired Comey last month.

Schlossberg will be watching the testimony closely.

"This could present a tremendous political risk to the market if he does release indeed some kind of a bombshell about the Trump presidency," he said Wednesday on CNBC's "Trading Nation."

On the other hand, if nothing "controversial" comes of the testimony, "it could actually create a massive relief rally in the equity market and the dollar," Schlossberg said.

Comey's prepared remarks were released Wednesday.

2. The European Central Bank meets

The European Central Bank is scheduled to meet Thursday and discuss monetary policy. Schlossberg is watching the euro's movement, specifically, after any policy change the meeting may yield.

"The euro has been on a tear lately. Partly because Emmanuel Macron won in France, but also because the market is speculating that the European Central Bank is going to taper the quantitative easing that's been in place for several years," Schlossberg said.

While it is not expected that interest rate policy will change, Schlossberg said, the market will be closely watching for any indication from ECB President Mario Draghi that indeed a "taper" is imminent; if that's the case, the euro has the potential to rise against the U.S. dollar to the 1.15 mark.

The currency dipped in and out of negative territory in Wednesday trading.

3. A key level for gold

Gold has flirted with the $1,300-per-ounce level this week as political tensions mount and the U.S. dollar weakens. Though gold fell in Wednesday trading, Schlossberg is watching for gold to perhaps reach that region once again on Thursday.

"On Thursday we have a tremendous amount of political risk in the market. If that indeed translates into a big breakout for gold above the $1,300-an-ounce level, it could mean potentially a long-term rally in the yellow metal," Schlossberg said.

Gold settled lower Wednesday at $1,289.50 per ounce.

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Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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