ECB & Fed on Today’s Trading Agenda – 6th October 2020

Today’s Market Outlook 

EUR/USD has fallen off 1.18 after ECB President Lagarde said the recovery is incomplete and uncertain, opening the door to more monetary stimulus. Earlier, the safe-haven dollar dropped amid hopes for a US fiscal deal. 

Break or bounce at 1.18? That is the question for EUR/USD traders, which have seen the world’s most popular currency pair retreat after two attempts to move toward the round number after President Donald Trump was discharged from hospital. 

The critical key is the US fiscal stimulus. The sooner and the larger a relief package comes, the more the safe-haven dollar can fall. 

Central bankers return to the scene on Tuesday. Christine Lagarde, President of the European Central Bank, will speak about the economy as eurozone coronavirus infections are on the rise. In her home country of France, Parisian bars will be closed on Tuesday. The Spanish capital Madrid is under lockdown and infections are advancing rapidly in Belgium, the Netherlands, and Ireland. 

If Lagarde expresses more concerns and readies more stimulus – also amid falling inflation – the euro could suffer. On the other hand, data from the summer remains encouraging – German factory orders exceeded projections with an increase of 4.5% in August.  

Jerome Powell, Chairman of the Federal Reserve, will also deliver remarks later in the day. He is unlikely to stray from the bank’s pledge to keep rates lower for longer, but without offering any imminent changes to the policy. 

RecentUSeconomic figures have been pointing to ongoing recovery, albeit losing steam. The Non-Farm Payrolls report showed an increase of 661,000 jobs, fewer than expected. On the other hand, the ISM Services Purchasing Managers’ Index beat estimates. With four weeks to go until the elections, Powell is unlikely to say anything earth-shattering.  

Overall, politics dominate but central bankers could also have a significant impact.  

Today’s High Impact Events

The times below are GMT+3. 

16.00 – ECB President Lagarde Speaks 

Potential instruments to Trade: EUR Crosses.   

17.40 – Fed Chair Powell Speaks 

Potential instruments to Trade: USD Crosses & Gold.   

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