The economic calendar surprised us with worse reading of manufacturing in the euro area this morning (45.7, the same as the previous reading), services (51.8) and Markit composite PMI (50.2) – both below the forecast by one tenth of a decimal. Manufacturing continues to decline.
The ECB bolstered the excitement with the news that further easing is not expected in the near future after the Repo rate cut in September and the renewal of Quantitative Easing.
Traders are interested in the ECB Press Conference. European Central Bank President Mario Draghi is to chair the monetary policy meeting and press conference for the last time today. After his eight-year term, he hands the ECB to the first female president Christine Lagarde. Lagarde is the former managing director of the International Monetary Fund as well as former France’s Minister for Foreign Trade and later finance and economy minister of France (which also nominated her as the first female chief of finance of a G7 country).
Lagarde will first chair the Central Bank meeting and update the economic forecast in December. While today, Draghi will speak about key topics like inflation, which is currently almost at stagnation. Despite attempts of monetary stimulus, the inflation rate in the Eurozone falls close, but does not reach the goal of 2%. In September, the CPI was 0.8% YoY, which is its lowest reading for 3 years.
He’s also likely to discuss the September monetary policy and the dispute that followed. A third of the Governing Council was against the idea of restarting QE, some members showed their frustration publicly and some of them even resigned.
The United States has also released several reports. Core Durable goods Orders came out at 12:30pm GMT – below the forecast of -0.3%. The initial jobless claims exceeded the forecast by 212K. The PMI comes out at 13:45 GMT and data on New Home Sales comes out at 14:00 pm GMT.
On the 4HTF for USDJPY we can see a bullish attempt to break above the resistance at around 108.620 by Tokyo close, reaching 108.753. But USDJPY bears pushed the price back into the range.
We have identified levels of support and resistance.
Resistance: In the area of 108.725, followed by 108.938, and then 61.8% Fibo at 109.362.
Support: First, close to 108.524, then 50% Fibo at 108.423, further down around 108.291.