Euro Received No Support from ECB (Weekly Review)

The main events of the past week include meetings of the Bank of Canada and the European Central Bank, and results of the meetings fully met expectations of participants of the financial markets. The Canadian central bank expectedly raised the interest rate, which caused a short-term growth of the Canadian dollar, but amid falling oil prices and demand for the USD, the growth of the loonie did not last long and was used for fairly large-scale sales. A return above 1.3000 worsens its prospects, but the loss of this support by the USD can move the prospects forward.

Continuing low inflation in Eurozone did not allow us to expect such surprises as an increase in the ECB interest rate, which, of course, did not happen. Comments by the ECB President Mario Draghi also gave no slightest reason to expect an increase in the foreseeable future, and the EUR, after a sluggish growth attempt, soon again came under pressure, updating the minimums paired with the USD. Italy’s conflict with the EU around the draft budget, political risks in Germany, and the differential in interest rates remain the main negative factors for the euro, and provided there are no positive news, the pressure will remain.

One of the main triggers of movements in the foreign exchange market were ups and downs on the global stock markets. Falling indexes contributed to the demand for the Japanese yen, which was able to push the USD below the 112th figure. Although under differential of the interest rates the sale of the USD paired with JPY cannot be called justified, the further development of the downward correction in the stock markets will help maintain pressure on the USD. In addition to the collapse of the indices, the risks to the USD are the trade wars unleashed by the United States.

Schedule for this week:

Monday, October 29
09:30 GMT – United Kingdom. Mortgage Approvals;
10:00 GMT – Eurozone. Economic Forecasts;
12:30 GMT – USA. Core Personal Consumption Expenditure (PCE) Price Index (YoY) (Sep);
12:30 GMT – USA. Personal Spending/Income.

Tuesday, October 30
23:30 GMT – Japan. Unemployment Rate;
00:30 GMT – Australia. Building Approvals;
08:55 GMT – Germany. Unemployment Rate;
08:55 GMT – Germany. Unemployment Change;
10:00 GMT – Eurozone. Gross Domestic Product (GDP);
13:00 GMT – USA. S&P/CaseShiller House Price Index (YoY) (Aug);
13:00 GMT – Germany. Harmonised Index of Consumer Prices (HICP);
13:00 GMT – Germany. Consumer Price Index (CPI).
Wednesday, October 31
21:45 GMT – New Zealand. Building Consents;
23:50 GMT – Japan. Industrial Production;
00:30 GMT – Australia. Trimmed Mean Consumer Price Index (CPI);
00:30 GMT - Australia. Consumer Price Index (CPI);

01:00 GMT – PRC. NBS Manufacturing Purchasing Managers Index (PMI);
01:00 GMT – PRC. Non-Manufacturing Purchasing Managers Index (PMI);
02:00 GMT – Japan. Bank of Japan (BOJ) Interest Rate Decision;
02:00 GMT – Japan. Bank of Japan Press Conference and Monetary Policy Statement;
04:00 GMT - Japan. Bank of Japan Press Conference;

07:00 GMT – Germany. Retail Sales;
10:00 GMT – Eurozone. Core Consumer Price Index (CPI);
10:00 GMT - Eurozone. Consumer Price Index (CPI);

12:15 GMT - USA. ADP Nonfarm Employment Change;
12:30 GMT – Canada. Gross Domestic Product;
13:45 GMT – USA. Chicago Purchasing Managers Index (PMI).

Thursday, November 1
21:30 GMT – Australia. AIG Manufacturing Index;
23:50 GMT – Japan. Foreign Bonds Buying;
23:50 GMT – Japan. Foreign Investments in Japanese Stocks;
00:30 GMT – Australia. Trade Balance;
00:30 GMT – Australia. Import/Export;
02:00 GMT – PRC. The People's Bank’s of China Interest Rate Decision;
08:00 GMT – Switzerland. Consumer Price Index (CPI);
09:30 GMT – United Kingdom. Markit Manufacturing Purchasing Managers Index (PMI);
12:00 GMT – United Kingdom. BoE Interest Rate Decision;
12:00 GMT - United Kingdom. BoE Meeting Minutes;
12:30 GMT - United Kingdom. Bank of England Governor Mark Carney Speaks;

12:30 GMT – USA. Initial Jobless Claims;
13:30 GMT – Canada. Manufacturing Purchasing Managers Index (PMI);
14:00 GMT – USA. ISM Prices Paid Index;
14:00 GMT – USA. ISM Manufacturing Purchasing Managers Index (PMI).

Friday, November 2
00:30 GMT – Australia. Retail Sales;
08:55 GMT – Germany. Markit Manufacturing Purchasing Managers Index (PMI);
09:00 GMT – Eurozone. Markit Manufacturing Purchasing Managers Index (PMI);
12:30 GMT – USA. Nonfarm Payrolls;
12:30 GMT – USA. Unemployment Rate;
12:30 GMT – USA. Average Hourly Earnings;

12:30 GMT – USA. Trade Balance;
12:30 GMT – Canada. Unemployment Rate;
12:30 GMT – Canada. Employment Change;

14:00 GMT – USA. Factory Orders.

Author: Anthony Porter, IAFT Analyst