ACT: Dollar Softer as Risk is Back on ahead of ECB Announcement
USD softer across the board as risk is put back on in response to European headlines. The Greek referendum remains the key topic that markets are focused on with two main questions - will it occur and if so, how will the question be framed? The Dollar Index is trading within its daily cloud and sees the Tenkan line and cloud base come in around 76.15/20 as near term support. On the data front, weekly initial jobless claims are due at 0830ET and shed more light on the labor situation ahead of tomorrow’s NFP report. At 1000ET, the Oct. ISM services index is scheduled for release as well as Sept. factory orders.
EUR firming as headlines continue to drive price action. Recent reports suggest that Papandreou is losing support for the referendum and the government moves closer to collapse. This was seen as a positive for risk as a referendum would increase the likelihood of imminent default. The ECB meets to announce interest rates at 0845ET and is expected to remain on hold at 1.50% and Mario Draghi will hold his first press conference as ECB President shortly after. EUR/USD is rebounding and currently about the 1.38 figure.
JPY weaker across the board except against the USD and NZE as markets turn to risk-on mode with European markets currently in positive territory. There was no significant economic data out of Japan and no comments from Japanese officials overnight. USD/JPY continues to test the top of the daily ichimoku cloud around the 78.00/05 area.
GBP firmer despite weaker services PMI which fell by more than expected to 51.3 in Oct. from the prior 52.9 (cons. 52.0). GBP/USD is back above the key 1.60 figure and testing the 100-day SMA which is currently around 1.6025. GBP/JPY rebounded off of its 100-day SMA and is now testing the 125.00 big figure.
CAD mixed against the G10 but firmer against the buck as oil advances (WTI crude slightly higher by about +0.76% at time of writing) and stock markets rally. There is no data of note due out of Canada today. USD/CAD is testing the top of its daily cloud and sees the Tenkan line and 55-day SMA come in around the 1.0060 area.
NZD relatively weak after soft NZ employment data. The 3Q unemployment rate surprisingly jumped to 6.6% from the prior 6.5% (cons. was for a decline to 6.4%) and the employment change was much lower than anticipated. NZD/USD dipped to test the 0.78 figure but has since rebounded with the rally in risk on European headlines.
