Euro Weekly Review 17 Oct – 21 Oct

Fundamental Summary

CPI Full Report
Euro area annual inflation was 0.4% in September 2016, up from 0.2% in August. In September 2015 the rate was -0.1%. European Union annual inflation was also 0.4% in September 2016, up from 0.3% in August. A year earlier the rate was -0.1%. These figures come from Eurostat, the statistical office of the European Union. In September 2016, negative annual rates were observed in ten Member States. The lowest annual rates were registered in Bulgaria (-1.1%), Croatia (-0.7%) and Slovakia (-0.5%). The highest annual rates were recorded in Belgium (1.8%), Estonia (1.7%) and Austria (1.1%). Compared with August 2016, annual inflation fell in nine Member States, remained stable in two and rose in sixteen. The largest upward impacts to euro area annual inflation came from restaurants & cafés (+0.08 percentage points), rents and tobacco (both +0.05 pp), while fuels for transport (-0.12 pp), gas (-0.11 pp) and heating oil (-0.10 pp) had the biggest downward impacts.

Interest Rate Decision Full Report Recording of press conference
“Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. We continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. Regarding non-standard monetary policy measures, we confirm that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim.” Mario Draghi, President of the ECB Introductory statement to the press conference.

Theresa May’s comments at EU Summit
Watch her speech here

Commitment of Traders Report
The COT report released on Friday indicates a further increase in short positions, a further increase in long positions, a lower close price (as of last Tuesday) and a further decline in net non-commercial positions.

Upcoming Tier 2 and 3 Data Releases
Monday: Manufacturing PMI, Markit Composite PMI, Services PMI

Technical Summary

EURUSD Daily

At the start of the month bears sold off the monthly central with a target of MS2. Price broke support at MS2 and MS3 and is now at support levels of March 2016.

EURUSD H4

At the start of the week price opened at WM2, bears sold of the H4 21 with support at WM2 continuing to hold until a break on Thursday after the ECB press conference. Some bears took profit just above WM1 before the market closed on Friday.

EURJPY H4

At the start of the week price opened at WM3 where bears entered with a target of WM1. Bears continued to sell throughout the week pushing price below WS2 where some profit taking took place just before the market closed on Friday.

EURJPY Daily

At the start of the month price opened just below MM2 where bulls entered and pushed price up to MR1 marking the top of the range. Bears sold and pushed price down to the bottom of the range, just below MM2, where some bears took profit shortly before market close on Friday.