US equities rallied after Joe Biden unveiled his $1.75 trillion spending deal ahead of his trip to the COP26 climate conference. He said that he believes that the narrow bill will get the support of moderates Democrats like Joe Manchin and Kyrsten Sinema. The two senators have previously rejected some of the proposals by Biden and other progressives. The announcement came shortly after the US published relatively weak GDP numbers. The numbers showed that the US economy expanded by just 2% in the third quarter. This was a sharp decline from the previous quarter’s increase of 5.7%. This weakness was attributed to the Delta variant and the supply shortages.
The EURUSD pair jumped sharply during a press conference by Christine Lagarde after the European Central Bank (ECB) delivered its decision. The bank left interest rates unchanged as most analysts were expecting. It also said that it will continue with its 1.85 trillion euro stimulus package at a moderately lower pace. At the same time, Lagarde said that the bank believes that inflation will keep rising in the near term and then decline in the course of the year. Economists expect that the Eurozone inflation rose by 3.7% in October, the highest level since 2008. In Germany, inflation rose by 4.6% in October while in Spain, it rose to a 37-year high of 5.5%.
The economic and earnings calendars will have some key events today. In Europe, Eurostat will publish its preliminary consumer inflation data for October. In most cases, the preliminary data is usually the same with the final data. Eurostat will also publish the first estimate of Eurozone GDP data. The next key data will be the latest US personal consumption expenditure (PCE) data. This is an important number since it is usually the Fed’s most favourite inflation gauge. Analysts expect the data to show that prices rose by more than 4% in September. In the UK, the Bank of England (BOE) will publish the latest mortgage approvals and lending data.
EURUSD
After days of consolidation, the EURUSD pair went parabolic in the overnight session as investors reacted to the ECB decision. The pair rose to a high of 1.1692, which was substantially higher than this week’s low of 1.1582. On the hourly chart, the pair is along the upper line of the Bollinger Bands. It has also moved above the short and longer moving averages while the MACD has gained substantially. Therefore, the pair will likely keep rising ahead of the EU inflation data.
USDCHF
The USDCHF collapsed after the weak US GDP data. The pair moved to a low of 0.9115, which was the lowest level since September 1. The pair has been in a major sell-off since early this month when it rose to a high of 0.9367. On the four-hour chart, the pair managed to move below the key support at 0.9150. It also moved below the Ichimoku cloud while the Relative Strength Index (RSI) dropped below the oversold level. Therefore, the pair will likely keep falling with the next key support being at 0.9050.
USD30
The Dow Jones index rallied as strong earnings helped to offset the relatively weak US GDP data. On the daily chart, the index is above all moving averages. It has also found a lot of resistance since the current level was along the highest level in August. Oscillators are also at the neutral level. Therefore, the index will likely keep rising in the near term.
