1. Euro traded lower against the U.S. dollar for the fourth consecutive trading day extending its losses below 1.1750. However even with today’s decline, the total losses over this period was just over 100 pips which is not a big move. The main focus for euro today will be ECB President Draghi’s speech in Frankfurt. He’s not the only policymaker speaking – Praet and Coeure will also be taking part in the same conference. EURUSD faces resistance at 1.1780 while support lies at 1.1665.
2. US stock markets ended near opening levels with the Dow slightly outperforming and crossing the 23k mark intraday for the first time in its history. Asian bourses trade mixed overnight with China slightly outperforming.
3. Today’s eco calendar contains US Housing data and the UK labour market report. Several central bankers speak, including ECB Draghi. The US releases its Beige Book.
4. The dollar continued the cautious uptrend that started Monday evening on headlines that chances of John Taylor becoming Fed chairman were rising. Catalonia moved temporary to the background as a driver for trading, but probably kept euro buyers on the side-lines. Higher than expected US import prices caused some further USD gains in the afternoon, but the rally petered out later.
5. GBPUSD was sold off yesterday even though CPI hit 3% level in September. BoE Governor Mark Carney also reiterated that “the judgment of the majority of the committee is some raise in interest rates over the coming months may be appropriate”. The developments affirmed the central case of a November BoE hike. However, markets are starting to look at some dovish scenarios. Firstly, a November hike is still not a done deal, even though it’s the most likely scenario. Secondly, the vote split could be dovish if hawks just win by a margin. Thirdly and most importantly, it could just be a one-off.