27 Oct: Euro lower after ECB tapering decision. H/S formation now suggests 1.1300/1.1200. US Q3 GDP today.

By | October 27, 2017

 

The Euro fell sharply after the ECB announced its tapering plan, pretty much in line with expectations, as the markets expected but leaving the price action looking ominous, perhaps for a run towards the head/shoulder objective of 1.1250. The QE programme was cut in half to Eur 30 billion per month from January, but the ECB hedged its bets by extending its asset buying programme by nine months given the problem of ongoing, low inflation, leaving traders unhappy with the cautious tone in the statement. Elsewhere the commodity bloc are under heavy pressure again while the US$ remains generally firm, supported by solid job data. The Initial jobless claims rose 10K to 233K, while the continuing claims dropped -3K to 1.89M in the week ended October 14, the lowest since December 1973. In other markets stocks are steady, weighed down by strong bond yields (US10Y – 2.46%) while the metals are heavy due to the stronger dollar. WTI is slowly breaking up above strong trend resistance and is about 0.5% higher on the day, underpinned by growing expectations that OPEC will extend its global accord to cut output.

Friday will be thin for data until the release of the Provisional Q3 US GDP (exp 1.3%qq, 2.6%yy), the US Personal Consumption/Expenditure (exp 1.2%qq) and the Michigan Consumer Sentiment Index (exp 96.0) which could combine to create a few waves. Some safe haven buying ahead of the weekend would not surprise, covering for the possibility of an escalation in the Spanish/Catalonia standoff. Ahead of that, the main focus will be on the Japanese CPI, the Australian PPI, the German Import/Export Index and a speech from the ECB’s Praet

CURRENCIES
EURUSD: 1.1654
Res  1.1680  1.1695  1.1720
Sup  1.1640  1.1610  1.1580
USDJPY: 114.01
Res  114.10  114.25  114.50
Sup  113.75  113.50  113.30
GBPUSD: 1.3157
Res  1.3195  1.3230  1.3250
Sup  1.3145  1.3110  1.3085
USDCHF: 0.9977
Res  0.9990  1.0020  1.0050
Sup  0.9940  0.9915  0.9890
AUDUSD: 0.7663
Res  0.7680  0.7700  0.7720
Sup  0.7655  0.7630  0.7600
NZDUSD: 0.6848
Res  0.6865  0.6880  0.6900
Sup  0.6835  0.6815  0.6800
INDICES / COMMODITIES
S&P: 2562
Res  2565  2570  2580
Sup  2555  2550  2540
DJI: 23346
Res  23375  23435  23500
Sup  23275  23195  23145
ASX SPI: 5912
Res  5915  5930  5945
Sup  5895  5880  5865
XAUUSD: 1267
Res  1270  1275  1280
Sup  1265  1260  1255
XAGUSD: 16.78
Res  16.90  17.05  17.15
Sup  16.75  16.65  16.50
WTI: 52.79
Res  52.90  53.70  54.55
Sup  52.25  51.50  50.80