Euro was sold off deeply yesterday on hint of further easing by ECB and stays weak in Asian session. The breach of 1.1086 support suggests that more weakness would be seen in EUR/USD in near term. The move in EUR/USD provided a boost to dollar index, which is now back pressing 96.7 resistance. The news also sent equities higher with DJIA closing up 320.55 pts, or 1.87% at 17489.16. Asian equities follow with Nikkei trading up more than 430 pts, or 2.3% at the time of writing. Strong risk appetite also gave Aussie and Kiwi a lift. Commodities are steady though, with crude oil hovering between 45 and 46. Gold is also gyrating around 1170 for the moment.
Yesterday, ECB left the main refinancing rate unchanged at 0.05%. The marginal lending rate also stayed unchanged at 0.3% and the deposit rate at -0.2%. At the press conference, President Mario Draghi acknowledged that the QE program has been "proceeding smoothly" and would "continue to have a favorable impact". Yet, he indicated that the decline in commodity prices and concerns about slowdown in emerging markets would prolong deflation. As such, the central bank would re-examine its bond buying program in December. This is interpreted as a dovish message and EURUSD fell below 1.12 for the first time since early October after Draghi's comment. The market is quickly pricing in further easing in coming months. More in ECB's Draghi Signaled to Discuss Further QE in December.
Released earlier today, Japan PMI manufacturing rose to 52.5 in October. China conference board leading index rose 1.6% in September. Eurozone PMIs will be the main focus in European session. Meanwhile, Canadian CPI will catch most attention later in US session.