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ECB expected to raise 75bps


U.S. equities rose for the third consecutive session. The Dow Jones Industrial Average rose 0.01% to close at 31839.11. The S&P 500 dropped 0.74% to close at 3830.6. The tech-heavy Nasdaq Composite dropped 2.04% to close at 10970.99. The knock-on effect from the tightened grip of  Chinese President Xi in China continues, and the U.S. stock, Greenback goes and short-term treasury goes lower. U.S. 10-year treasury yield continues to retreat to around 4%. The yield was last seen trading at 4.015%. The policy-sensitive 2-year treasury yield sits at 4.422%.

The ECB Monetary Policy Decision Statement released today will have a strike on Euro with the dovish hike, since the rumour says there will be a 75 bps raise, it may cause a signal to loosen policy and an opportunity for DXY. If the ECB is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive for the EUR.

The US GDP(Q3) comes up today will represent the overall economic activities after the adjustment of inflation, it is predicted there will be a 2.4% growth rate, and if the result is lower than estimates, the DXY may be undermined and this might be the case given the overall trends of high inflation and rising interest rates weighing on investor confidence.

U.S. GDP(QoQ) of Q3, 2022 will be announced on Thursday, Oct 27, given the persistently challenging environment, with historically high energy costs and rapidly rising interest rates, as the very high inflation, especially in food and household costs, we have less optimistic about GDP forecast.

Main Pairs Movement

The Dollar index dropped 0.03% throughout yesterday’s trading. The U.S. Greenback faced strong selling pressure with the drop of Treasury yields fell on Wednesday along with the dollar, which was under pressure against major peers, also the up-day for the S&P 500  leaves the DXY vulnerable. The optimism in the Europe market and the higher stocks, lift European currencies, both leading DXY to a sensitive market.

EURUSD gained 0.02% throughout yesterday’s trading. The shared currency kept going higher and came to its highest in Oct, it is expected to remain in the grip of bulls ahead of the interest rate decision by the European Central Bank which may announce a rate hike by 75 basis points.

GBPUSD gained 0.05% throughout yesterday’s trading. With its latest Prime Minister, Rishi Sunak being appointed, IMF and the British are positive about the economic stability and the decline of the debt.

Gold dropped 0.02% throughout yesterday’s trading. The non-yielding metal took advance against the Dollar as treasury yields retreated.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
JPYBOJ Outlook Report (YoY)11:00 
EURDeposit Facility Rate (Oct)20:151.50%
EURECB Marginal Lending Facility20:15 
EURECB Monetary Policy Statement20:15 
EURECB Interest Rate Decision (Oct)20:152.00%
USDCore Durable Goods Orders (MoM) (Sep)20:300.2%
USDGDP (QoQ) (Q3)20:302.4%
USDInitial Jobless Claims20:30220K
EURECB Press Conference20:45 
EURECB President Lagarde Speaks22:15