Euro Dollar Rate Forecasts for 2014-2015 - page 44
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Wait, what? Someone suggesting not to sell the euro on the ECB? Well, sort of
Credit Agricole question whether selling the euro at current levels is a wise move
They say that the ECB is unlikely to exceed expectations, which by and large expect an extension of QE and a deposit rate cut of more than 10bps
If the ECB deliver a bigger than expected cut the market would take that as a signal that the ECB have hit the lower bound and a sell the fact reaction may trigger position squaring related EUR upside later next week
They also see some scope for USD to fall after a Fed hike as the Fed will want to lessen any further USD appreciation
"All of the above suggests that the USD is facing rising downside correction risk in the weeks to come. As such we advise against selling pair such as EUR/USD around the current levels. If anything we believe that better levels closer to 1.08-1.10 can be reached before new shorts should be considered. "
Wise words I think and they still plump for EURUSD shorts but at higher levels
I also think they're spot on with the call about the after reactions to both bank meetings
source
SocGen sees 'huge' risk of US dollar correction
SocGen says US dollar almost 10% overvalued
According to estimates of fundamental equilibrium exchange rates (FEER), the US dollar is almost 10% overvalued and its rise over the past year will knock 0.5% off GDP growth annually for the next five years, notes SocGen.
"FEERs are interesting rather than useful from a forecasting perspective, but the FOMC's view of the impact of dollar strength will inform Fed policy and in particular, the tone of the anticipated 16 December statement. Think hyper-dovish. Before we get to that, we have the ECB next week who have promised us more easing and can't afford to disappoint.
That may keep the dollar rallying for another two weeks, but after that, the risk of a correction (softer dollar) is huge," SocGen argues.
source
Dollar rises on ECB, SNB rate-cut expectations The dollar rose across the board on Friday, hitting an eight-month high against a basket of currencies as speculation the Swiss National Bank would follow the European Central Bank in cutting deposit rates further pushed major competitors lower.
Expectations of growing interest rate differentials between the dollar and major European currencies have pushed the dollar index up to near its yearly peak of 100.390, the highest it has been since June 2003.
Most analysts anticipate the Federal Reserve will raise U.S. interest rates next month, strengthening the dollar, while the ECB and SNB are expected to announce further easing.
For the week, the dollar is up more than 1.1 percent against the Swiss franc, having touched a five-year high against the safe-haven currency on Friday. It was the second straight week of 1 percent gains for the dollar against the franc, having risen nearly 1.2 percent last week.
The euro rebounded in afternoon U.S. trading to move back above $1.06 after falling near seven-month lows in overnight trading. It was last down 0.1 percent against the dollar to $1.0596.
The single currency is down 3.7 percent versus the dollar so far this month as markets anticipate the ECB announcing a loosening of monetary policy at its Dec. 3 meeting.
read more
EU Preview: Will Draghi Beat Kuroda? Countdown to ECB Meet Mario Draghi and his Governing Council fellows in the European Central Bank (ECB) may be heading for a very lively if not hot debate on Wednesday and Thursday as they convene to ponder over fresh staff forecasts for the euro zone's economy and consider their further steps. Many of them, led by Draghi himself, have shown impatience over the disappointing price growth figures as well as weak data from the real economy and translated them as a need to act.
One could ask whether the ECB policymakers have drawn any conclusions from the fact that they've been busy purchasing bonds since March - but the euro zone is now back in deflation or disinflation at best.
The other group, led by openly dissenting Germans, believes that no action is needed and point to core inflation numbers rising above 1%. They argue that global oil prices, having been very low for more than a year and now trading at less than half their peak levels in 2014, have decisively impacted price growth - or the lack of it.
Governing Council member Ardo Hansson from Estonia, echoing German views, argues that the latest macroeconomic figures have surprisingly moved upwards and there is now no reason to do more.
read more
EUR/USD: Heavy In The Run To ECB But Be Cautious Of A Squeeze - BNPP The ECB is likely to deliver substantial new easing measures at Thursday’s meeting this week, says BNP Paribas.
"Our economists now forecasting a 20bp cut in the deposit rate to -40bp, perhaps with different tiers for varying levels of excess reserves. We also expect enhancement’s to the central bank’s asset purchase program, with our economists’ forecast calling for a EUR10bn increase in the run rate of purchases and an extension of the reference date by a year to September 2017," BNPP projects.
"We expect anticipation of action at the meeting to keep EURUSD heavy in the run-up to Thursday, with the pair likely to test 1.05.
The package of measures we are forecasting would be generally bearish for the EUR and consistent with continued weakness in the currency in 2016, but we continue to see scope for EURUSD to squeeze higher off very low pre-meeting levels in the immediate aftermath of the press conference," BNPP adds.
source
Goldman: Here Is How EUR/USD Will Move On The Day Of ECB Meeting On the day of the last ECB meeting (October 22), Goldman Sachs projected that EUR/USD would go to 1.05 in the run-up to the December meeting.
As we are approaching that level, GS discuses what is now priced in EUR/USD, if there is scope for a dovish surprise on December 3, and how the pair will likely move on the day of the ECB meeting and going into the FOMC December meeting.
"The big picture is that ECB QE, since its announcement in January, has had a troubled history, with volatility in long-term Bund yields – the Euro zone safe-haven asset – far above that of JGB yields (Exhibit 1). That volatility has impaired a key transmission channel of QE, which is to push Euro zone investors into risk assets and thereby boost growth, and is in our minds the main reason why EUR/$ went back to 1.14 in May (Exhibit 2)," GS notes.
EUR: Waiting For The ECB Bazooka - Credit Agricole The December ECB meeting will be the key event for EUR this week with recent speeches by various Governing Council members suggesting that the ECB will pull no punches when it comes to boosting the outlook for inflation in the Eurozone.
CACIB economists expect a 10bp deposit rate cut and extension of QE by six months to March 2007. The Governing Council should also leave the door wide open for more easing measures from here.
When it comes to the FX markets reaction, investors have focused on the prospects for further cuts of the deposit rates. Recent media reports have suggested that the EBC may apply a two-tier deposit charge that could allow them to cut rates more aggressively so long as they could spare banks with structurally larger excess cash holding like deposit-taking retail banks.
With the markets already expecting a 15bp deposit rate cut, chances are that the ECB may struggle to exceed already dovish market expectations.
While we cannot exclude a test of this year’s lows ahead of the ECB, we think that EUR could squeeze higher in the aftermath of the meeting.
read more
EUR/USD: Euro Snaps 4-Day Losing Streak on Data Support The euro currency managed to rebound from its eight-month bottom against the greenback seen earlier this week at $1.0532, as the US macro updates came in below forecasts, pushing the pair back to the intraday high.
However, the EUR/USD has remained under significant bearish pressure for the last six weeks, while market participants await the crucial meeting of the European Central Bank (ECB) later this week, where the central bank's officials are expected to deliver some form of further stimulus to fight against sleepy inflation.
In addition, the non-farm payrolls update might basically confirm the odds that are hovering around 80% that the Federal Reserve (Fed) will finally raise interest rates at the upcoming meeting in December.
In the afternoon, the EUR/USD added 0.64% to $1.0632, while the US dollar index decreased from Monday's eight-month high at 100.31 by 0.38% to 99.79 points.
EURO stands pressurized by its US namesake; Concerns loom over ahead of most anticipated ECB's meet
After Euro recovered overnight by around 0.50% against its US counterpart, the former has again started retreating towards its multi-month lows trading around around 1.061 levels. This sell off in the pair is coming up because of the most-awaited ECB meet due for tomorrow and due to the buying momentum in the greenback.
Euro started today with negative movement as the US dollar jumped back into action and is creating its dominance again among its rivals. With more quantitative easing in the Euro Zone, the supply of Euro tend to increase which is likely to deteriorate the value of Euro against its US counterpart. Along with this, with no key data due for Euro Zone, the traders will take clues from the series of US' macro data- ADP non-farm employment data and Yellen's speech due later in the day.
Euro Bears Quick To Take Profit; Favor Lower Levels - Analysis Heading into Thursday's European Central Bank decision, where new easing measures are expected to be announced, market players remained bearish towards the euro but also quick to take profit on their short positions, just in case ECB easing is already priced in.
The euro was trading at $1.0618 in afternoon action Wednesday, on the high side of a $1.0551 to $1.0636 range.
Earlier, the pair took out the most recent low of $1.0558, seen Nov. 30, to post a new seven-month euro low, before edging higher on position squaring ahead of the ECB decision.
The focus is on the April 13 euro lows near $1.0532 and the April 13 lows near $1.0521 and then a test of the psychological $1.0500 mark.
The larger downside target is the 2015 euro lows near $1.0458, seen March 16. Many 2016 forecasts have a parity estimate for the pair.
In the event the ECB either surprises hawkishly or its decision is priced in and the euro is propelled higher, market players will be ready to sell any larger rallies, traders said.
CFTC data released Monday, after being postponed from Friday, showed that speculators had a net euro short position of -175,484 contracts as of Nov. 24, versus last week's net euro short of -164,177 contracts.
The latest position was the largest net euro short seen since May 12, when speculators had a net euro short of -178,976 contracts and getting closer to the record net euro short of -226,560 contracts seen March 31.
read more