Currencies
EUR/USD – dropped sharply after the ECB decision to extend QE until the end of 2017, although the size of the program will be brought down from the current €80 billion to €60 billion from April. The ECB has decided to widen the scope of assets it can buy though. What is also important to note is that ECB President Draghi has said that the ECB did not discuss tapering, which in his words mean ending QE, so in that sense, QE is likely to continue beyond December 2017 as well and only the size is likely to change. This has led to EUR to weaken severely and has undone nearly all the gains of this week. We are headed again to the lower levels reached last week and on Sunday night, right after the Italian Referendum.
USD/JPY – as indicated, we have seen that any drop has been for a short time only, and yesterday already we saw a reversal. This coincided with the ECB decisions, which weakened the EUR severely, and in turn caused the USD to strengthen. We are starting to see a triangle forming with a top below the 115.
GBP/USD – continued to move down, even though there was a short spike, but resumed moving down quite quickly as well. In the short term the 1.25 level is a level that will be acting as support.
Indices
DAX 30 – moved sharply higher yet again as the ECB will be extending its QE program until at least next year, boosting the equity markets.
Dow Jones 30 – continues to edge closer to the magical 20,000 level. It looks like it is not a question of if, but rather when this level will be reached.
S&P 500 – soared again to a new record high. Since the lows of Election Night exactly a month ago, we have moved up already 11%!
XLF – it looks like there is only one way for the financial index to go and that is up. Yesterday is went up by yet another 1%.
Commodities
Gold – is again testing the support around the 1162 level as the USD strengthened again and also the data out of China remains solid.
Oil – moved up to pare all the losses of the previous day as there was renewed hope that OPEC and also non-OPEC countries would find common ground and agree on the necessary production cuts and also implement any such agreement. This weekend they will meet, so we expect some more volatility today as traders will position their trades and on Monday when we will know the results. However, it is expected that even with the cuts the oil market will remain oversupplied until at least the middle of 2017.