Euro Dollar Rate Forecasts for 2014-2015 - page 28
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Looking For The ECB Put: Where To Target EUR/USD From Here? - Danske
The main signal from yesterday’s ECB meeting was the Governing Council’s ‘willingness to do more, readiness to do more and its ability to do more’. This dovish message was well received by the markets with a broad-based rally in fixed income as well as the stock markets. The Governing Council judged it 'premature' to conclude on the downside effects on growth and inflation expectations but the market will now build up expectations for the QE programme to be scaled up or extended. We now expect the ECB to extend QE purchases beyond September 2016, see ECB will continue its QE purchases beyond September 2016.
It seems the ECB is the place to turn to for a policy response that can support risk markets as neither the Fed nor Chinese policymakers seem to be able to do it. The expectations of easing from the ECB should provide some support for stocks but given that the overall global policy response is going to be quite muted in our view, stock markets will continue to be nervous for some time.
The rally in fixed income continued today and we generally see more downside for bond yields in the short term. In the longer term we expect yields to rise again when the Fed starts hiking and global growth gets back on its feet during next year.
The dovish statement from the ECB sent EUR/USD lower and we expect the divergence in monetary policy to drag EUR/USD lower still in coming months. Our forecast is 1.10 in 3M from the current level of 1.115.
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USD, EUR, JPY, GBP, AUD: Outlooks For The Coming Week - Morgan Stanley
"USD: USD Strong Against EM. Bullish.
We believe that USD strength will continue to be focused against commodity and EM currencies. Volatility remains elevated and risks surrounding China could keep it high. Should China be resolved, this could lead to a temporary rally in EM FX, but it would not be long before the market started bringing forward the timing of the first Fed hike, ending any relief rally in EM FX. We remain generally bullish USD.
EUR: The ECB Pushes Back. Neutral.
The latest ECB press conference was dovish in tone, and the central bank increased the amount it can purchase of new issuances. In only making one adjustment to its current policy, the central bank kept the door open for further easing, contributing to the weakness seen in EUR. The central bank will need to maintain its dovish tone going forward to avoid the currency gaining ground once again off the back of its current account surplus and inverse relationship with risk.
JPY: Watch Wages. Neutral.
More global asset market volatility would support the safe haven JPY, but we have to increasingly be aware of the risk of a BoJ response. After a 2Q contraction, the ramp into 3Q growth remains disappointing. Key will be cash earnings to test if the BoJ’s narrative of higher corporate profits filtering through to wages is gaining traction.
GBP: Waiting for Opportunities to Sell. Bearish.
We maintain our bearish GBP view, but are cautious that current levels may not be the most attractive to enter short positions. Markets have pushed the timing of the first hike in the UK back to August 2016, well beyond our economists’ expectation of a February hike. However, risk appetite remains weak and concerns in China are high. GBP tends to underperform in periods of heightened volatility, and this could continue.
AUD: Domestic Story Deteriorating. Bearish.
Despite the sell-off already seen in AUD, we believe there is scope for further weakness. It’s notable that AUD has sold off even as iron ore prices rose recently, suggesting that it is more than simply a reflection of external factors. Indeed, domestic data continue to deteriorate and the market is now pricing in nearly a full cut by the end of the year. Still, with our economists expecting a cut in November, we believe the market will move to our more dovish view, pressuring AUD."
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EUR/USD: Sideways: Levels & Targets - UOB
EUR/USD sharp rebound from the 1.1088 low on Friday has dented the downward momentum and the current movement is likely the early stages of a consolidation phase, notes UOB Group.
"Expect sideway trading for today, likely between 1.1105 and 1.1205," UOB projects.
"As long as 1.1255 is not taken out, we continue to expect an eventual move lower to 1.1015," UOB adds.
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For now it did not get close to 1.12
EUR/USD: What China, SNB Reserve Data Suggest For USD Rebalancing Demand? - BNPP
China reported a $93.9 bn decline in foreign exchange reserves for August, notes BNP Paribas.
"With USD weakness vs. other reserve currencies in that month supporting the USD value of non-USD reserves, actual FX intervention was likely somewhat larger, perhaps closer to $110 bn if we assume China’s currency allocation mirrors the weights in the IMF’s COFER survey," BNPP adds.
"The large drop in currency reserves due to USD-selling intervention will also bolster market expectations that the central bank will need buy USD vs. other reserve currencies to rebalance its portfolio—using COFER allocations as a guide would suggest over $20bln in EURUSD selling is possible, for example, though this is just an estimate--timing and size of any such flows are unknown," BNPP argues.
"The Swiss National Bank also published reserve data Monday, showing an approximately CHF9 bn increase in reserves. Adjusting for valuation effects suggests about CHF 3 to 4bln in possible EUR-buying FX intervention on the month, implying possible EURUSD reserve diversification sales here as well, albeit on a much smaller scale," BNPP adds.
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EUR/USD: Here Is The Signal If A Top In Place - UOB
EUR/USD traded sideways albeit at higher range than anticipated, notes UOB Group.
"Positive undertone suggests that a move to test 1.1240/45 will not be surprising but a sustained break higher appears unlikely at this stage. A move back below 1.1160 would indicate that a shortterm top is in place," UOB argues.
"Overall, EUR has to move back below 1.1130 in the next 1 to 2 days before a sustained down-move can be expected," UOB adds.
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EUR: New Targets On Higher Forecast Profile N-Term - Credit Agricole
We revise our near-term forecasts for EUR to the upside to account for the latest China-induced risk selloff. We expect the positive correlation between risk aversion and EUR to keep the single currency supported in the near term.
The resilience should be evident against USD given that the Crédit Agricole CIB economists have pushed their Fed lift-off call from September to October 2015. Going into year-end and into 2016 we expect the policy divergence trade to reinstate itself, however.
Strong EUR coupled with slowing global growth and lower commodity prices should increase the risk that the ECB QE will continue beyond September 2016, making the EUR an even more attractive funding currency.
All that should bring EUR NEER back down to its recent lows over the forecast horizon. We lower our medium-term outlook for EUR/USD in view of the persistent policy divergence between the dovish ECB and hawkish Fed.
Credit Agricole now targets EUR/USD at 1.12 by the end of Q3, 1.06 by the end of the year, and 1.04 by the end of Q1 of 2016.
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USD: The Quiet Before The Storm? - Credit Agricole
Risk sentiment remains unstable ahead of this weekend’s data out of China and next week’s FOMC monetary policy announcement.
It seems to become a stronger notion that the Fed will consider higher rates next week, irrespective of more muted price developments and intact uncertainty as related to Asia. This is also reflected in Bloomberg consensus expectations, according to which a lift-off is favoured next week. If so, the greenback should remain supported versus for instance the JPY. This is especially true as rate markets price in a probability for the Fed to tighten of only 30%.
However, even if the Fed will remain on hold, as forecasted by our economists, central bank Chairwoman Yellen should consider a more hawkish rhetoric during the press conference in order to prepare the market for a lift off in October. This in turn suggests that any USD downside should stay limited from the current levels.
All of the above suggests too that EUR/USD upside should prove limited, even if the pair continues to benefit from weak sentiment.
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And it goes on and on and then bulls jump in whenever the naives start to believe that the final decline have started. That is all market makers talk - nothing else
EUR/USD Forecast Sep. 14-18
EUR/USD managed to enjoy a nice recovery, ending the week on a positive note. Is it set for more gains? The big event of the week in Europe are the ZEW survey and inflation data. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Talk from the ECB on QE wasn’t news for the euro and didn’t really have a negative effect. Data-wise, we had little in the way of surprises, but the strong German trade balance reminded us that the euro is bid. In the US, we had some good JOLTs news but disappointing consumer confidence ahead of the big event: the all important Fed meeting coming now. Will the mounting tension result in an explosion of the pair?
* All times are GMT