All Eyes on ECB Draghi's Speech; BoC Surprised Markets! USD/CAD Surged 150 pips

All eyes today will be on the ECB press conference to see whether further easing is on track for the Euro area. BoC surprised the market as Governor Poloz announced that they "actively discussed" more stimulus, pushing USD/CAD more than 150 pips higher! The U.S. economy is on a moderate growth according to Fed Beige Book and consumer prices broadly flat contraindicating December's rate hike.

U.S. Economic Growth Modest Across the Districts
On Wednesday a mixture of data came out from U.S. driving the dollar to be traded pretty choppy. The U.S. currency rose marginally against the euro and the Canadian dollar, while it recorded losses versus the New Zealand dollar, Japanese yen and the Australian dollar. The Fed Beige book revealed that more districts' growth was modest or moderate and only three had improved since the previous report. Wage growth continues modest and labor market conditions unchanged while the consumer prices remained broadly flat or rose slightly. The overall sentiment from the report is modest thus, is not prompting Fed rate hike at all. The data released from the housing sector for September was not optimistic either but contained a hope for U.S. economic future. The housing starts plunged 9% at 1.047M versus a drop of 5.8% the month before. Conversely, the building permits rose 6.3% compared with a drop of 0.4% the month before implying that a number of new construction projects will start and retail sales will rise.

All Eyes on ECB Draghi's Press Conference
The euro traders will be focused on the ECB policy meeting today. No changes are expected at the current monetary policy, however, all eyes will be on ECB President Mario Draghi during his press conference at 12:30 GMT to see whether any further easing is in the future plans. Since the last policy meeting, Eurozone's economy improved some if the main indicators. The consumer prices growth picked up at 0.4% from 0.1% before while all the sentiment indicators from ZEW and IFO surveys increased significantly for Germany and Euro area as well. At the previous policy meeting, the ECB president said that he is comfortable with the current level of monetary policy and expressed more confidence in the general economic outlook, however, ECB lowered growth forecasts and Draghi announced that Eurosystem committee will evaluate further stimulus options.

EUR/USD – Technical Outlook
The euro dropped back below 1.1000 versus the U.S. dollar over the last two days and is moving slightly above the 1.0950 strong support level. The EUR/USD pair is developing below the falling trend line which is holding over the last five months while the currency dropped to a new 2-month low yesterday of 1.0955.

The technical structure suggests further bearish movement since the pair failed to surpass the 1.1050 resistance level. If the price slips below the 1.0950 barrier, will open the way for a retest of the 1.0900 psychological level, which overlaps with the first support of the pivot points. The focus today will be on the ECB monetary policy announcement, so we are waiting for a bounce off the 1.0950, if the price slips towards the 1.0900 barrier and then an aggressive sell-off move to 1.0750 – 1.0820 support zone.

On the daily chart, the price continues developing well below its moving averages (50-SMA, 100- SMA, and 200-SMA), whilst the technical indicators hold within the negative territory. The RSI indicator is moving near the 30 level, although with no clear directional strength. The MACD oscillator lies below its trigger and zero lines with some strong momentum.

U.K. Employment Report Marginally Improved
The sterling was traded mixed as well while the employment report was better than expected at some points. The unemployment rate for the three months to August remains unchanged but low at 4.9% while the number of unemployed people in the U.K. decreased at 0.7K, less than market expectation to drop at 3.0K from 7.1K the previous month. The average earnings excluding bonus grew 2.3% above forecasts of 2.1% while average earning including bonus met consensus of 2.3% growth. Today, the economic indicators from U.K are limited to retail sales, thus I wouldn't expect significant volatility in the GBP pairs.

GBP/USD – Technical Outlook
The GBP/USD pair is trading flat for a second consecutive day, stuck around the 23.6% retracement of its September decline. The pair posted little daily volatility compared to the recent trading days despite that UK unemployment rate remained steady at 4.9% despite the Brexit vote, wages came in line with markets' expectations and the number of people in work surged by 106,000 in the quarter. The pair surged from 1.2135 to 1.2326 resistance barrier before settling below the psychological level of 1.2300, during the Asian session.

From a technical point of view, over the last seven sessions, the pair is establishing and trading within a consolidation area between the psychological support at 1.2100 and the 1.2330 resistance level. In addition, the price is trading slightly above the 50-SMA on the 4-hour chart endorsing the bullish attitude. Currently, the cable is moving near the 1.2280 region and if the bears are strong enough to push the price further up, we would expect extensions towards the 1.2500 strong barrier. Otherwise, a failure to break the 1.2330 obstacle, if there is a successful penetration of the 1.2100 support level, then should prompt a downward move. Then, the pair will challenge 1.1978, a 31-year low. The MACD oscillator is moving in a positive territory, however, with weak momentum.

BoC Surprised the Markets! USD/CAD Surged Over 150 pips
The Canadian dollar has had an interesting day, to say the least. As widely expected, the Bank of Canada didn't downgrade its forecasts as much as feared and also kept its current rate at 0.5% during its policy meeting on Wednesday. The first reaction sent the USD lower, to test 1.3000 before surging more than 150 pips, to end the day around 1.3120. The surprise came when Bank of Canada Gov. Stephen S. Poloz said they "actively discussed" more stimulus. In addition, the BoC trimmed its outlook for growth this year to 1.1%, from the 1.3% it had forecast in July. Moreover, the central bank said it now expects the economy to grow by 2% in both 2017 and 2018, saying the economy is now forecast to get back to full capacity around mid-2018.

USD/CAD – Technical Outlook
Technically, we remain bullish on USD/CAD for short to medium term. As you can see on the chart below, the pair failed to break, or close, below the key support level at 1.3000. On top of this, additional support was found from both the 100-SMA and the 200-SMA on the weekly chart. Moreover, it should be noted that the long-term ascending trend line, which dates back in April 2016 continues to provide a significant support to the price action.

Australian Dollar Faces Losses Following Employment Report
AUD/USD experienced a significant fall early today, following the midnight employment report came out from Australia. Even though, the unemployment rate decreased at 5.6% in September, the employment change is negative for the second consecutive month, at -9.8K, missing market forecast to rise 15.0K. The decrease of the unemployment rate is probably justified from the decrease of the participation rate.

AUD/USD – Technical Outlook
The AUD/USD pair fell more than 0.6% early this morning and is recording the first negative candle after three consecutive green days. Today, the pair had a pullback on the 0.7735 strong resistance level and is currently trading slightly above the significant support zone at 0.7650 – 0.7660. A consolidation within the aforementioned area is possible, however, in the case of a penetration of the zone we would expect a retest of the 0.7600 barrier which overlaps with the 50-daily SMA. Also, the price need to go through the three SMAs (50-SMA, 100-SMA, and 200-SMA) on the 4-hour chart after the challenge of the psychological support at 0.7600.

The technical indicators seem to be in agreement with the bearish scenario since both are falling. MACD is still moving in a positive path whilst, the oscillator had a bearish cross with its trigger line. In addition, the RSI indicator fell below the overbought area and is approaching the 50 level with strong momentum.

What to watch today
In the Eurozone, the current account is scheduled to be published whilst later on, in the U.K., the retail sales are forecasted to rise by 4.8% yoy in September from 6.2% before. The focus of the day is the ECB interest rate decision. Both the interest rate and the deposit rate are expected to remain unchanged at 0.0% and -0.4%, respectively. The speech of ECB President Mario Draghi, a while later, will be closely watched in order to learn out if the central bank schedules to apply further easing measures.

In the U.S., jobless claims for the week ended on October 15th will be announced while the CB leading indicator is expected to tick up 0.2% mom in September from -0.2% the month prior. The existing home sales are also coming out and are forecasted to be 5.38M in September versus 5.33M before.