One Stop Centre of Financial Market Trading blog

Previous session overview

The dollar fell sharply against its major rivals Thursday as continued talk of another round of Federal Reserve stimulus to kick-start a slowing U.S. economy contrasted with better-than-expected data out of the euro zone, where the central bank remains on the path to policy normalization.

Positive earnings reports from European blue-chip companies also stoked a bid into riskier, higher-yielding assets, reducing the appeal of the safe-harbor dollar.

EURUSD is brushing up against USD1.39, hitting recent intraday high of USD1.3898 from USD1.3766 late Wed. The pair benefits from earlier released better-than-expected euro-zone data and strong European corporate earnings. Risk also stoked by positive surprise in US weekly jobless claims. USD weighed down broadly by continued expectations of another round of Fed stimulus.

The ICE Dollar Index, which tracks the U.S. currency against a trade-weighted basket of others, was at 77.540 from 78.103.

The Bank of Japan also was in the spotlight Thursday after it left key rates unchanged, but announced details on its own massive asset-purchase plan.

The dollar declined against the Japanese yen, threatening to break below JPY81, as part of its broad downtrend.

Market expectation

If the euro zone continues to register better-than-expected data, such as Thursday's economic sentiment indicator that surprised to the upside, the European Central Bank is likely to remain on a path to monetary policy normalization, eventually raising key rates, contrasting with a Fed that is likely to still be in a phase of ultra-loose monetary policy, analysts said. That contrast will keep the dollar on the defensive in the longer term.

EURUSD is testing at USD1.3890/05 (intra-day support-resistance levels), with resistance levels at USD1.3960 (intra-day level) and USD1.3980 (Oct 26 high). On the downside, support levels lie at USD1.3800 (intra-day level), and below here, USD1.3770/90 (intra-day level) and USD1.3730 (Oct 27 low).On the short-term, the pair's upside target lies between USD1.3900 and USD1.3950, say analysts.

Oct 28	Count.	Event	For	Unit	Imp.	Act.	Cons.	Prev.
00:00	GR	Market Holiday- National Holiday
00:00	EU	ECB and Central Bank of Cyprus hold Eurosystem Seminar with Mediterranean Central Banks
00:00	JP	BoJ Outlook Report (The Bank's View) published
00:00	CH	SNB board member Danthine gives speech on Interest Rate and Credit Risk
00:00	ES	FinMin Salgado gives speech at Foro Cinco Dias
02:00	NZ	Monetary Aggregates M3	Sep	% y/y		-2		-3.3
07:00	EU	ECB Governing Council member Weber speaks on "Global Imbalances: Causes and Challenges" at a conference
07:15	SE	Economic Tendancy Survey	Oct	Survey		110.4	113	114.3
07:30	DK	Unemployment	Sep	%
07:55	DE	Unemployment	Oct	k		-3	-30	-37
07:55	DE	Unemployment Rate	Oct	%		7.5	7.4	7.5
08:00	IT	Hourly Wages	Sep	% m/m		0.3
08:00	IT	Hourly Wages	Sep	% y/y		1.7		2.2
08:00	AT	Manufacturing PMI	Oct	index		56	7.4	56.1
08:30	EU	ECB Governing Council member Orphandies and Chairman Trichet participate in the Eurosystem seminar of Mediterranean central banks
09:00	EU	Consumer sentiment	Oct	index		-11	-11	-11
09:00	EU	EC Business Climate Index	Oct	index		0.98	0.79	0.76
09:00	EU	Economic sentiment	Oct	index		104.1	103.5	103.2
12:30	US	Initial Claims	23-Oct	k		434	455	455
13:00	IE	ECB Governing Council member Honohan speaks on "Euro Membership and Bank Stability: Friends or Foes?"
13:30	EU	ECB Council member Costa speaks on financial reform in Portugal
15:00	EU	EU leaders hold a Summit in Brussels
23:01	GB	Gfk Consumer Confidence	Oct	Index			-22	-20