Trade Idea (2020-10-30) ECB suggested additional easing in Dec

Trade Idea

Good morning.

Yesterday’s US stocks rebounded, and DJIA rebounded for the first time in four days. Due to the spread of infection of COVID-19 in Europe and uncertainty about the US presidential election, the early stage began to decline, and DJIA fell by more than 200 at one point, but the decline was regained due to a bargain purchase mainly on IT and high-tech sector.

From European market to the end of the market to the middle of the New York market, forex market was in a risk-off USD buying. USDJPY tried to break below 104 at the end of the European market, but USD-buying won in the New York market, and it temporarily rose to 104.7.

EUR was a day-long selling advantage (see currency strength below), in the New York market it fell to 1.165, almost ending at a low. The ECB’s policy remained unchanged as expected, but a statement suggested the possibility of additional easing in December. Ms. Lagarde’s clear statement at the press conference that “ECB has little doubt that it will act in December” led to EUR selling.

USDJPY stayed on without breaking 104. Until the middle of Europe, JPY buying was bigger than USD buying, but in the US market, USD was stronger. EUR was weak all day. The long-term depreciation of USD is likely to lead JPY buying, not EUR buying.

EURUSD H1 (Please click the chart to enlarge.)

USDJPY H1 (Please click the chart to enlarge.)

Market Environment

Yesterday’s currency strength

US market yesterday

DJIA: 26,659.11 (+139.16, +0.52%)
NASDAQ: 11,185.59 (+180.73, +1.64%)
S&P 500: 3,310.11 (+39.08, +1.19%)
GOLD: 1,865.9 (-2.1)
OIL: 36.26 (+0.09)
US 10-YR: 0.821 (-0.015)
VIX: 37.59 (-2.69)

Asian market today

Nikkei: 23,195~ (-136)
CME Dow future: 26,377~(-282 Dow)

Economic indicators today

GMT 09:00 (GE) GDP-3Q
GMT 10:00 (EU) CPI
GMT 10:00 (EU) GDP-3Q
GMT 14:00 (US) Michigan sentiment