Forex news for the European morning trading session 26 Oct 2017News:
ECB Preview – Is this the end of QE ?All the ECB previews in the one place
UK legislation for withdrawal from EU scheduled to be debated in parliament 14 NovCatalan government asks Supreme Court to suspend Article 155Norway's Norges Bank leaves key rate unchanged at 0.5%Sweden's Riksbank leaves key rate on hold at -0.5% as expectedRBA's Debelle says there's still sizeable spare capacity in labour market
UK full-time workers inflation-adjusted weekly earnings decrease by 0.4%Spain De Guindos sees 2017 GDP growth just above 3%Japan Post Insurance intend to keep unhedged foreign bond buying steady Oct-MarchPBOC gauges demand for 2-month reverse repos
Forex option contract expiries for today 26 OctTrading ideas for the European session
ForexLive Asia FX news wrap: USD a wee drip (technical term) lowerData:Germany Nov GFK consumer confidence 10.7 vs 10.8 expEurozone Sept M3 money supply yy 5.1% vs 5.0%..
The UK's EU withdrawal legislation scheduled for debate in parliament Nov 14 The UK Government is out with a brief statement, via Reuters, announcing that Britain's EU withdrawal legislation is scheduled for debate in parliament on November 14th.
ECB: Announcement of an extension of the APP for 2018 anticipated – Westpac Analysts at Westpac suggest that today all eyes remain on the ECB Governing Council as they near the end of their current asset purchase program, which is due to expire in December.
“At the October meeting, some formal announcement of an extension of the program for 2018 is anticipated. Whether all the detail is made available remains an open question.”
“To our mind, the most logical program structure would be to taper from €60bn to €40bn in the first half of 2018, then to €20bn in the second six months. That would allow a smooth transition to a flat balance sheet come 2019. The alternative would be a circa €30bn pace through the entire year. Either way, some €360bn in additional liquidity would be provided to markets and the economy during 2018. Interest rates will remain unchanged in 2018 and early 2019.”
USD/JPY but keeps the red near 113.65 region ahead of US data • Hold weaker for the second consecutive session.
• Sliding US bond yields capping meaningful up-move.
• ECB-led volatility could provide some trading opportunities.
The USD/JPY pair maintained its offered tone for the second consecutive session, albeit has managed to trim some of its early losses to 113.34 level.
The pair's modest recovery attempt during early European session got sold into near the 113.80 area and was being capped by persistent weaker tone around the US Treasury bond yields.
Even a goodish pickup in the greenback demand, with the key US Dollar Index recovering early lost ground and now holding with minor gains, did little to help the pair to regain traction and aim towards conquering the 114.00 handle.
Meanwhile, traders seem to have largely ignored the prevalent positive trading sentiment around European equity markets, which tends to dent the Japanese Yen's safe-haven appeal, with the..
EUR/USD stays near lows around 1.1800, Draghi’s speech eyed – Upside in spot lost momentum near 1.1840.
– All eyes on QE's ECB and Draghi's presser.
– Catalonia could call elections, allaying some concerns.
The shared currency is now alternating gains with losses vs. the greenback on Thursday, with EUR/USD now hovering over the 1.1800 neighbourhood.
EUR/USD looks to ECB, Catalonia
Spot is retracing part of the overnight spike to weekly tops in the 1.1840/45 band, although some decent support emerged in the boundaries of 1.1800 the figure for the time being.
Cautiousness persists among traders in light of the imminent ECB meeting, where a move on rates is ruled out but an announcement of the modification of the size and/or duration of the current bond-buying programme is likely.
Back to Catalonia, separatist leader C.Puidgemont is expected to give a press conference later today where he could call for elections.
On the USD-side, market participants seem to have left be..
Brazil: Selic rate heading for (a historical low of) 7% – Rabobank Mauricio Oreng, Senior Brazil Strategist at Rabobank, notes that the Copom has cut the benchmark Selic rate by 75bps to 7.50% p.a., as widely expected.
“In the forward guidance, the BCB continued to hint at a “moderate reduction of the pace of easing” (read a 50-bp cut) for the next meeting (December 5-6).”
“Assuming Selic rate at 7.0% this year and next, the BCB’s inflation simulations point to IPCA headed to mid-target (4.25%) for 2019. That is a policy horizon increasingly relevant, as the BCB seems to recognize in the statement.”
“Despite some degrees of freedom left in the statement (for eventual changes in scenario), we believe that the BCB’s flight plan today is to end the cycle at 7.00% (a new historical low).”
“Hikes? Given the huge slacks in the economy, we only see the BCB neutralizing an expansionary policy stance in 2020, and with moderate hikes of 100bps. Naturally, our scenario assumes the..
Catalonia’s President Puigdemont set to call a snap regional election for Dec. 20 Spanish newspaper – La Vanguardia, as cited by Reuters, reported that the Catalan president Carles Puigdemont is set to call a snap regional election for Dec. 20 on Friday, as he seeks to break a one-month deadlock between the Madrid government and Catalan separatists.
Puigdemont will deliver an address at 1.30 p.m (1130 GMT), his office said.
ECB preview: Leaning on the long end by other means – SocGen Anatoli Annenkov, Research Analyst at Societe Generale, suggests that autumn has finally arrived, and with it the ECB’s decision on QE in 2018 and given its increasing efforts to anchor long-term policy expectations, worrying less about the monthly flows, theye are changing their call and now expect the ECB to extend QE for nine months, at a monthly pace of €25bn (vs. six months at €40bn before).
“We expect the ECB to keep the door open to more QE thereafter if needed, and we maintain our rate hikes in March and June 2019 to put an end to the negative deposit rate. A key reason for our change is that the ECB finally seems convinced of the benefits of not depleting the limited bond universe when facing structurally weak inflation, allowing it to remain in the market for longer. Consequently, communication has shifted to the positive growth story, the need for patience and the continued impact of the size of the ba..