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Euro May Rise as ECB Leaves Markets Wanting

Euro May Rise as ECB Leaves Markets Wanting

Talking Points:

All eyes have turned to the monetary policy announcement from the European Central Bank, with Mario Draghi and company are widely expected to expand monetary stimulus. Options include broadening the scope of QE-eligible assets, scrapping the program’s September 2016 end date, increasing the size of monthly purchases from the current €60 billion and pushing the deposit rate deeper into negative territory from the current -20bps.

The markets seem primed for a big-splash accommodative gesture, raising the bar on the ECB to deliver a dovish-enough result to mollify investors and increasing the threat of disappointment. If traders are left unimpressed, the Euro is likely to rise amid profit-taking on short positions while broad-based risk appetite deteriorates, weighing on sentiment-linked FX including the Australian and New Zealand Dollars.

The Kiwi returned to the offensive overnight following yesterday’s corrective pullback. The move tracked rising front-end bond yields, pointing to fading RBNZ rate cut speculation as the driving catalyst. The Aussie came under early selling pressure following disappointing Trade Balance data. Here too however, an improving policy outlook proved supportive and largely offset data-inspired losses.

The Canadian Dollar raced higher after Energy Intelligence (EI) reported that Saudi Arabia may propose a 1 million barrel output cut to stabilize global oil prices at some point in 2016. The news sent crude oil prices sharply higher, pulling the Loonie upward along the way. The kingdom is said to condition its acceptance of a cut on participation from non-OPEC producers as well as Iran and Iraq. EI cited an unidentified OPEC delegate as the source of the story.

Losing Money Trading Forex? This Might Be Why.

Asia Session

21:45NZDValue of All Buildings SA (QoQ) (3Q)0.5%1.8%1.6%
22:30AUDAiG Perf of Services Index (NOV)48.2-48.9
23:50JPYLoans & Discounts Corp (YoY) (OCT)3.32%-2.87%
00:00AUDHIA New Home Sales (MoM) (OCT)-3.0%--4.0%
00:30AUDTrade Balance (A$) (OCT)-3305M-2600M-2406M
01:35JPYNikkei Japan PMI Services (NOV)51.6-52.2
01:35JPYNikkei Japan PMI Composite (NOV)52.3-52.3
01:45CNHCaixin China PMI Composite (NOV)50.5-49.9
01:45CNHCaixin China PMI Services (NOV)51.2-52.0
06:30JPYBOJ’s Kiuchi Speaks in Tokyo---

European Session

08:45EURMarkit/ADACI Italy Services PMI (NOV)53.953.4Low
08:45EURMarkit/ADACI Italy Composite PMI (NOV)-53.9Low
08:50EURMarkit France Services PMI (NOV F)51.351.3Low
08:50EURMarkit France Composite PMI (NOV F)51.351.3Low
08:55EURMarkit Germany Services PMI (NOV F)55.655.6Medium
08:55EURMarkit/BME Germany Composite PMI (NOV F)54.954.9Medium
09:00EURMarkit Eurozone Services PMI (NOV F)54.654.6Medium
09:00EURMarkit Eurozone Services PMI (NOV F)54.654.6Medium
09:00EURMarkit Eurozone Composite PMI (NOV F)54.454.4Medium
09:30GBPOfficial Reserves Changes (NOV)-$16MLow
09:30GBPMarkit/CIPS UK Services PMI (NOV)55.054.9High
09:30GBPMarkit/CIPS UK Composite PMI (NOV)55.055.4High
10:00EUREurozone Retail Sales (MoM) (OCT)0.2%-0.1%Medium
10:00EUREurozone Retail Sales (YoY) (OCT)2.6%2.9%Medium
12:45EURECB Main Refinancing Rate (DEC 3)0.05%0.05%High
12:45EURECB Deposit Facility Rate (DEC 3)-0.30%-0.20%High
12:45EURECB Marginal Lending Facility (DEC 3)0.30%0.30%High
13:30EURECB Draghi Holds Press Conference--High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.