ECB meeting looms, stocks tumble overnight

October 25, 2018

A big day for markets today as the ECB meets later tonight, while world markets try to recover from another sell-off.

The USD gained in strength overnight, sending paired currencies lower. The EUR/USD opened the day at $1.14703 and looked set for a mundane session as it traded flat in the first several hours of the day. Mid-session trading saw the pair bump up to highs of $1.14758 before the rot set in. Not long after those highs, the euro fell sharply in the same hour, then the decline was more gradual, with the pair hitting lows of $1.13773. It bounced off those slightly in late trading and is currently trading at $1.13951. The GBP/USD fared no better after opening at $1.29809 and remained steady in early trading, peaking at $1.29901. The losses on the pound weren’t as steep as the euro but the fall was bigger, with the pair tumbling to a low of $1.28656 late. It is currently trading at $1.28842.

The Dow was belted last night after what looked like being a positive session. The index opened at 25,252.05, remained rather steady early then started a small decline which saw it drop to 25,024.53. The day then climbed to a high of 25,349.13 before the sell-off began. Late trading saw the Dow plummet to a low of 24,525.50, where a small bounce in the last hour of the session saw it climb to its current level of 24,699.00. The Dax was not immune to the sell-off after opening at 11,364.44. The German index declined slightly, then climbed to a high of 11,391.30. It the succumbed to the downward pressure placed on it by the Dow, falling for the rest of the session, closing at lows of 11,049.30.

Today is quite a busy day for markets, with the most significant event being the interest rate decision out of Europe later tonight. Although the ECB is not expected to raise rates, it will be crucial to listen to the remarks made by ECB President Mario Draghi, regarding the economy. His remarks come further into focus as the EU has rejected the latest budget put forward by Italy. This stand-off could make markets shaky and Draghi’s comments could add to those jitters. Draghi will be holding a press conference around 45 minutes after the interest rate decision is published. Other data set for release today includes:

Japan – SPPI

China – CB Leading Index

Europe – German GfK Consumer Climate, German Ifo Business Climate, Spanish Unemployment Rate

US – Durable & Core Durable Goods Orders, Goods Trade Balance, Prelim Wholesale Inventories, Unemployment Claims, Pending Home Sales, Natural Gas Storage, FOMC Members Richard Clarida and Loretta Mester speak


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