EUR/USD looks for direction near 1.1380, Draghi eyed
- The pair struggles to regain traction below the 1.1400 handle.
- The greenback stays sidelines around 96.60.
- ECB’s Mario Draghi will be speaking later in the session.
The single currency remains under pressure at the end of the week and is now prompting EUR/USD to navigate around 1.1370/80.
EUR/USD now looks to Draghi
The pair remains vulnerable so far this week, trading in the area of 2-month lows and finding support in near 1.1350 for the time being.
The ECB meeting left no room for surprises on Thursday, while the Governing Council reiterated the positive view of the economic conditions in the region and showed optimism that inflation should clinch the bank’s target over the medium term.
In the meantime, Italy remains in centre stage as exclusive driver of the pair’s price action. Today, credit rating agency S&P is expected to publish its report on the country.
Moving forward, President M.Draghi and Board member B.Coeure are due to speak in Brussels and Paris, respectively.
Data wise across the Atlantic, the US docket includes the first estimate of Q3 GDP and the final print of the U-Mich index.
EUR/USD levels to watch
At the moment, the pair is down 0.01% at 1.1373 and a break below 1.1356 (low Oct.25) would target 1.1319 (200-week SMA) en route to 1.1299 (2018 low Aug.15). On the flip side, the immediate hurdle aligns at 1.1470 (10-day SMA) seconded by 1.1505 (21-day SMA) and finally 1.1550 (high Oct.22).
China-Japan sign three-year FX swap deal of up to $30 billion
Japan and China signed a bilateral currency swap arrangement on Friday aimed at enhancing the financial stability of the two countries, the Bank of Japan said.
The arrangement, which takes effect on Friday and lasts until Oct. 25, 2021, will allow the exchange of local currencies between the two central banks for up to 200 billion yuan or 3.4 trillion yen ($30 billion), the BOJ said.
China and Japan on Friday signed a broad range of agreements on strengthening bilateral ties, pledging to step up cooperation in areas from finance and trade to innovation and securities listings.
The agreements were signed during Japanese Prime Minister Shinzo Abe’s visit to Beijing for the first formal Sino-Japanese summit in seven years, as Asia’s two biggest economies looked to further build relations and trust against a backdrop of trade friction with the United States.
Stock Market News
Tech stocks battered after disappointing Amazon and Alphabet results
So-called FANG stocks and other tech shares sank in extended trade on Thursday following disappointing quarterly reports from Amazon.com Inc (AMZN.O) and Alphabet Inc (GOOGL.O).
The weak results from Amazon and Google parent Alphabet were the latest setback for the high-growth quartet of stocks known as FANG, which also includes Facebook Inc (FB.O) and Netflix Inc (NFLX.O).
Nasdaq futures NQcv1 fell 0.8 percent and S&P futures EScv1 lost 0.5 percent, suggesting the U.S. stock market may see more selling when it opens on Friday.
Wall Street favorites in recent years, the FANG stocks have been punished in a month of volatility for U.S. equities that has some investors worried a decade-old bull market may be ending.
The FANG group, along with heavyweight tech stocks Apple and Microsoft (MSFT.O), have made outsized contributions to the S&P 500’s gains in recent years, and a prolonged downturn for those stocks would be a major setback for the market.
Asian Equities Slide on Anxiety Over U.S. Corporate Results
Asian markets slid in afternoon trade on Friday as anxiety over the outlook for U.S. corporate profits weighed on sentiment.
Risk sentiment seemed to have turned sour in afternoon trading sessions in Asia even after U.S. stocks closed higher, as Asian stocks and U.S. stock futures both traded lower.
Amazon.com Inc (NASDAQ:AMZN)’s shares plunged 6% in after-market trading as its sales and operating income fell short of estimates. Meanwhile, Google parent Alphabet (NASDAQ:GOOGL) said its third-quarter revenue also missed forecasts.
Looking ahead, markets are likely to focus on the upcoming U.S. third-quarter GDP data due later in the day.
“Markets will be watching this number carefully as it could give signs if we are close to peak earnings for U.S. corporates. Housing data and consumer goods durables data has been soft lately,” said Bank of Singapore’s Sim.
IBM Study: Most Global Financial Firms Think Central Banks Should Issue Digital Currencies
The majority of global financial institutions surveyed believe that central banks should develop central bank-issued digital currencies (CBDCs), according to a joint study by IBM Blockchain World Wire and the Official Monetary and Financial Institutions Forum (OMFIF) released Oct. 25.
The study includes 21 central banks that participated in the OMFIF’s research between July and September 2017. The reports notes that participants failed to find a compromise on whether governments should issue their own cryptocurrencies, as well as were divided over the associated processes of managing and accessing those CBDCs, tech news media The Next Web notes.
76 percent of respondents have reportedly expressed uncertainty about the efficiency of distributed ledger technology (DLT) deployments, while most financial institutions surveyed said that they believed that central banks should issue their own digital currencies.
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