DailyFX US AM Digest: Euro Knocked Back by ECB; DXY Index Above 94
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The DXY Index traded above 94.00 for only the third day in October today, fueled by Euro weakness around the European Central Bank rate decision (the Euro is 57.6% of the DXY Index overall). Markets were anticipating a taper to the ECB’s QE program to €30 billion/per month, but the taper was seen as a touch more dovish in that the duration of the program was pushed to September 2018, rather than June 2018 as was expected. ECB President Mario Draghi used his press conference to underscore the ECB’s commitment to keeping interest rates at their current low levels for an extended period of time, including beyond the termination of the QE program. You can read the ECB market alert here.
DailyFX Economic Calendar: Thursday, October 26, 2017 – North American Releases
With the ECB policy meeting in the rearview mirror, the remainder the North American economic calendar is relatively quiet. There are no other ‘high’ importance releases on the day, and only one ranked ‘medium’ – the September US Pending Home Sales report. Housing data for the US has been mixed in September, with the New Home Sales and Existing Homes sales giving divergent readings. Markets have generally been discounting the impact of September US economic data due to the interference wrought by Hurricanes Harvey and Irma.
DailyFX Webinar Calendar: Thursday, October 26, 2017
EURUSD: Retail trader data shows 35.2% of traders are net-long with the ratio of traders short to long at 1.84 to 1. The number of traders net-long is 12.7% lower than yesterday and 21.9% lower from last week, while the number of traders net-short is 12.7% higher than yesterday and 7.6% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bullish contrarian trading bias.
Five Things Traders are Reading
- “EUR/USD Revisits Support After ECB Reduces, Extends QE” by James Stanley, Currency Strategist
- “Euro Stumbles as ECB Signals Tightening of Monetary Policy” by Martin Essex, MSTA, Analyst and Editor, and Christopher Vecchio, CFA, Senior Currency Strategist
- “Preview for October ECB Meeting and Outlook for EUR-crosses” by Christopher Vecchio, CFA, Senior Currency Strategist
- “Bitcoin Pushes Higher on Amazon Rumor; Gold Falls Further” by Nick Cawley, Analyst
- “DAX Consolidating or Topping? ECB May Determine Its Fate” by Paul Robinson, Market Analyst
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