- US economy slowed down
- US home sales pending declined in September
- ECB kept monetary policy
- At trading in Asia, the yield on 10-year bonds rose to 1.61% per annum
On Thursday, October 28, at the end of the day, the EUR/USD pair increased by 0.67%, to 1.1681. The high was recorded at 1.1692. The price traded in a sideways trend until the release of American statistics and the start of the press conference of the head of the ECB K. Lagarde.
The US economy slowed down. Preliminary US GDP data showed that the economy grew 2.0% QoQ in Q3 against expectations of 2.7% growth. US home-in-progress sales declined 2.3% month-on-month in September, following a sharp 8.31% increase in August.
The European Central Bank left interest rates on major refinancing operations, margin credit line and deposit line unchanged at 0.00%, 0.25% and -0.50%, respectively.
The ECB did not change the volume of the Pandemic Emergency Purchase Program (PEPP), leaving it at 1.85 trillion euros. The central bank will continue to buy back assets under this program at least until the end of March 2022 and in any case until it considers that the crisis caused by the coronavirus pandemic is over.
Scheduled statistics (GMT +3):
- At 10:00, Spain will publish GDP for Q3.
- At 11:00, Germany and Italy will publish Q3 GDP.
- At 11:30, in the UK, there will be a report with data on approved mortgage applications for September.
- At 12:00, the Eurozone and Italy will present the consumer price indices for October. Eurozone will publish GDP for Q3.
- At 15:30, in Canada will be released GDP for August. The US is to publish a benchmark index of personal consumption expenditure for September, personal income and expenditure for September.
- At 16:45, in the USA the index of business activity of the Federal Reserve Bank of Chicago will be released
- At 17:00, Consumer Confidence Index from the University of Michigan for October.
Current situation:
As of this writing, the major currencies are showing mixed performance. The pound and the Australian remained slightly positive. Major currencies are correcting after yesterday's gains. Additional pressure on the market comes from the increase in the yield on 10-year bonds.
There is also positive news for risky assets. Developer Evergrande made another debt payment and avoided default for the second time in two weeks. The $ 45.2 million payment is due on September 29th. Evergrande has a 30-day maturity date on bonds, so things have been delayed.
The focus today is on GDP statistics for the 3rd quarter in the EU. In the American session, it is worth paying attention to the core index of personal consumption spending for September and the consumer confidence index from the University of Michigan for October.
Technical analysis:
The EUR/USD pair is correcting against the backdrop of a decline in the EUR/GBP cross, as well as an increase in UST10 yields. The price recovered to the trend line drawn through the tops 1.2266 and 1.1909. To take the course to the level of 1.19, buyers need to accumulate strength to overcome the resistance zone of 1.1700-1.1750. Support for today is the level of 1.1635. If it does not resist, then the price can quickly return back to the level of 1.1590.
Summary: on Thursday, the single currency rose in price on weak data on US GDP for the 3rd quarter. The EUR/USD pair recovered to the trend line drawn through the tops 1.2266 and 1.1909. Due to American statistics, traders ignored K. Lagarde's pigeon tone, so buyers should not be shown weakness. The faster the euro falls, the higher the likelihood of a return to the 1.1590 level.