Euro testing 1.30 Resistance

ECB Uneventful, Market prepares for FOMC Minutes, Jobs Report

The US Dollar Index has been sliding lower this morning as the risk-on trade dominates the early action. Economic data from the US has been relatively uneventful which may be viewed as a positive.

Challenger Job Cuts saw a 70% Y-Y decline, initial claims came in slightly above expectations, and factory orders were better than feared.

The DXY has slipped back to the 79.50 area which it is now testing for Support. The move comes ahead of this afternoon’s FOMC minutes which promise to strike a dovish tone as well as tomorrow’s BLS report (Current Briefing.com NFP consensus is for 120-K).


 

The EURis higher this morning although it has been unable to break above the key 1.30 resistance level. The ECB held it’s monthly interest rate meeting this morning, but there was little in the way of new details. The fact that it was a non-event is not surprising as the central bank was looking to move to the back of the room and allow the EU finance ministers meeting (8 Oct) and the EU Leaders Summit (18-19 Oct) to take center stage. Mr. Draghi reiterated comments that were supportive of the euro with the one caveat being his focus on short term-inflation trends being higher. Spain and France both held auctions this morning. In general they were viewed as slightly below expectations despite seeing favorable yields and demands. The acceleration of the positive trend has slowed which is the main reason for the disappointment.

The GBP has moved back into the 1.61 mark this morning as it tracks the EUR higher. The BoE did not make any changes to it’s interest rates or asset purchase program this morning which was expected.

The JPY is bouncing around the 78.50 mark. One would expect the Yen to see more selling pressure given the risk-on trade, but the currency is firmly straddling the 78.50 mark.
Paul A. Ebeling, Jnr.

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