- ECB Draghi’s last appearance as governor was uneventful.
- However, it was another eventful day in the UK Parliament.
EUR/USD took on the 200-hour moving average at the lows of the session and has stablised there while attention turns from the European Central Bank and back to UK politics in recent trade. EUR/USD is currently trading at 1.1105 having travelled south on the day from a high of 1.1162 to a low of 1.1093, falling -0.22% on the day.
In the European session, in Governor Mario Draghi’s last meeting and ECB news conference, it was a rather uneventful one, albeit which was as expected. The central bank’s monetary policy stance was unchanged without any changes to the macro-economic assessment either, although Draghi did say that the economic developments since the September meeting underpin a determination to act which, therefore, adds to the bearish outlook for the single currency. At this juncture, markets will now look to the replacement of Draghi as to what to expect from Christine Lagarde.
“The main tasks for Christine Lagarde will be to repair the rift between the hawks and the doves at the Governing Council, to start the strategic review which could eventually lead to some recalibration of the price stability definition, and assess whether the pro-active monetary policy of the last few months is still effective at the lower bound of (negative) interest rates,”
analysts at ING Bank argued.
Brexit and snap elections called
Meanwhile, across the Channel, it was another eventful day in the UK Parliament. British Prime Minister Boris Johnson on Thursday called for a snap election on December 12. “Condition for more time for parliament is that we go for election on December 12. To create a credible deadline there must be a hard stop of an election. It would be morally incredible for Labour to refuse to back an election,” he said to his fellow right-honourable gentlemen – Labour was since reported to that it “will back an election once no deal is ruled out” which means it is still very unclear that Johnson can get the election he wants – The SNP had also indicated that it will not be voting for an early general election.
Indeed, the uncertainty surrounding Brexit also affects the eurozone but the euro traders have been complacent over such risks year-to-date judging by the implied volatility which remains at the lower bound for the year and around of that of the pound whereby the markets are clearly braced for sterling to break, one way or another. If a no-deal were to happen, the euro would surely be hit hard as European stock markets on both sides of the channel collapse.
EUR/USD levels:
The single unit has stabilised off its lows of the day that have converged with the rising 200-hour moving average around 1.11 the figure which guards territories back to a prior area of support and resistance around 1.10 the figure and 1.0950 thereafter. 1.1150/60, as the highs for the day, come into play on the upside as a 61.8% retracement of the 21-24th Oct range.
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