One Stop Centre of Financial Market Trading blog

Previous session overview

The dollar gained broadly Wednesday after a Wall Street Journal report dashed expectations that the Federal Reserve would engage in a massive program of "quantitative easing" asset purchases to kick-start the U.S. economy.

After recently hammering the greenback on the idea the Fed would announce a dollar-weakening shock-and-awe program to stoke growth, investors turned back to the buck on the report the Fed over several months will purchase only a few hundred billion dollars worth of Treasurys, far from the more than USD1 trillion some had expected.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 77.920 from 77.675.

Better than expected U.S. durable goods figures for September did little to help the dollar extend its gains, as "nobody's really putting on any major positions now," ahead of the Fed announcement next week of its possible stimulus package, said traders.

The dollar also gained sharply against the Australian dollar, which was dragged down by weaker-than-expected domestic inflation data. A slower rate of inflation tamps down expectations the Reserve Bank of Australia will increase key interest rates at its next meeting, leading the Australian dollar to shed nearly 1.5% against the greenback.

Market expectation

If the Dollar Index, at 77.964, breaks down below hourly resistance at 77.908 a minimum lower move would test 77.763. Extended weakness would likely result in lower trading on the day. If the dollar weakens Wednesday then the euro, at USD1.3804, would be going for USD1.4007. But the dollar, at JPY81.74, is strong against the yen, and traders should give it room to test a potential intraday high of JPY82.71, said technical analysts.

GBPUSD support lies at USD1.5800 (intra-day level), and below here, USD1.5770 (session low) and USD1.5690 (Oct 26 low). On the upside, immediate resistance lies at USD1.5880/00 (session high/Oct 27 high), and above here, USD1.6000 (psychological level) and USD1.6070 (Feb 3 high).

Oct 27	Count.	Event	For	Unit	Imp.	Act.	Cons.	Prev.
00:00	DE	CPI (Prelim)	Oct	% y/y		1.3	1.3	1.3
00:00	DE	CPI (Prelim)	Oct	% m/m		0.1	0.1	-0.1
00:00	EU	ECB and Central Bank of Cyprus hold Eurosystem Seminar with Mediterranean Central Banks (27th-28th Oct)
00:00	JP	BoJ Deputy Governor Nishimura speaks at International Association of Deposit Insurers conference
00:00	SE	Riksbank Deputy Governor Oberg speaks on the interest rate decision and Monetary Policy Report at the West Sweden Chamber of Commerce and Industry
00:00	SE	Riksbank Deputy Governor Ekholm gives speech on the interest rate decision and Monetary Policy Report at SEB in New York
00:00	SE	Deputy Governor Svensson debates how our view of central banks has changed as a result of the latest financial crisis at theCEPR/ESI conference (27th-28th Oct)
00:00	JP	BoJ Deputy Governor Nishimura speaks to the International Association of Deposit Insurers
00:30	AU	Trimmed Mean inflation	Q3	% q/q		0.6	0.7	0.5
00:30	AU	Weighted Median inflation	Q3	% q/q		0.5	0.7	0.5
02:00	NZ	NBNZ Business Confidence	Oct	index		23.7		13.5
06:45	FR	Consumer Spending	Sep	% m/m		1.5	0.4	-1.6
06:45	FR	Consumer Spending	Sep	% y/y		1.1	-0.3	1.2
07:00	ES	Retail Sales	Sep	% y/y		-2.9		-2.5
07:30	IT	ISAE Business Sentiment	Oct	index		99.8	98.5	98.6
09:00	IS	CPI	Oct	% y/y		3.3	3	3.7
09:00	IS	CPI	Oct	% m/m		0.7	0.4
09:00	EU	ECB Council member Costa speaks on the Portugese economy
12:00	NO	Norges Bank interest rate announcement followed by press conference @12:45
12:30	US	Durable goods orders	Sept	% m/m		3.3	2	-1.0
12:30	US	Durables ex defence	Sept	% m/m		2.9		-0.9
12:30	US	Durables ex transport	Sept	% m/m		-0.8	0.5	1.9
13:00	BE	GDP (Prelim)	Q3	% q/q		0.5		1.0
13:00	BE	GDP (Prelim)	Q3	% y/y		2.1		2.6
14:00	US	New Home Sales	Sep	k			300	288
20:00	NZ	RBNZ Official Cash Rate announcement
23:50	JP	Large Retailers sales	Sep	% y/y			-2.5	-1.8