Euro Dollar Rate Forecasts for 2014-2015 - page 46
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EUR: ECB Overreaction Should Reverse; Where To Target? - BNPP
Despite the ongoing market disappointment with the extent of ECB action last week, the bottom line is that the ECB easing has been scaled up significantly and in subsequent remarks President Draghi strongly signalled readiness to do more if needed, argues BNP Paribas.
"With EUR overall positioning now very light (only -2 out of +/-50 according to BNP Paribas FX Positioning Analysis)we believe EURUSD will prove unsustainable at current levels," BNPP adds.
BNPP expects the pair slip to 1.06 by year-end.
EUR/USD: Euro Hits Daily Highs Despite Weak German Trade Data The euro hovered near daily highs ahead of the market open on Wednesday, driven primarily by the broad market sentiment that had switched to a risk-off mood due to persistent weakness in oil prices.
"With iron ore prices and oil prices both falling to multi year lows below $40 it is slowly becoming apparent that what appeared to be a little local difficulty has all the potential to be a perfect storm for the commodities complex," Michael Hewson from CMC Markets UK wrote on Wednesday.
The euro was seen firmly higher, rising 0.27% to $1.0920, after hitting its daily high of $1.0928 earlier.
Wednesday's European calendar offered little data and therefore little capability to add bolder stimulus for the currency pair. Germany reported its latest trade figures on Wednesday, with the latest import and export data for October.
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EUR/USD: Euro Continues March Above $1.10 The single currency rose to a one-month high after European Central Bank (ECB) Governing Council member Ewald Nowotny said financial markets formed absurd expectations for increased stimulus.
The euro advanced 1.19% to $1.1019, reaching the strongest position since November 2.
Since the interest-rate cut announcement on December 3, the single currency has gained more than 3% against the greenback.
The disappointment the markets felt at the ECB decision sent the pair soaring around 4% higher to near $1.10 in a matter of hours.
Earlier in the session, Germany released figures showing the trade surplus shrank in the euro zone powerhouse down from €22.9 billion to €22.5 billion. Exports also rose 3.3% to €106.2 billion in the ten months of 2015.
With little relevant news scheduled during the US session, beyond news that oil stockpiles plunged more than anticipated, it remains to be seen if the 1.10 barrier will be broken in today's session.
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If Long EUR/USD, What To Do Now? - UOB
EUR/USD break above last week’s peak of 1.0980 resulted in a quick rise to a high of 1.1041, notes UOB Group.
"Upward momentum is not very strong and those who are long from last week may like to take profit at the 1.1095 target. Stop-loss is adjusted higher to 1.0880 from 1.0795," UOB advises.
"Only a move back below 1.0965 would indicate that the immediate upward pressure has eased," UOB adds.
UOB maintains a long EUR/USD position from 1.0935, with a revised stop at 1.0880, and a target at 1.1095.
EUR/USD: Large Triangle; Make Or Break Levels - Nomura, JP Morgan The technical strategy teams at Nomura, and JP Morgan provide some insights on EUR/USD technical setup and projected path using mainly Elliott-Wave analysis.
Nomura: Corrective rally marks wave-(A) of a larger bear triangle.
"The corrective wave-B in Euro looks like it completed at 1.0796. That makes the rally to 1.1043 a wave-C, completing an A-B-C corrective rally.
So we have a sharp 5-wave decline (wave-(3)) and a 3-wave correction (wave-(A)) to the 50% Fib. This is bearish for Euro and implies that a leg lower can unfold now.
S/t, a large triangle would be ideal over the next few weeks and that means we need a wave-(B) down towards ~1.07. Near-term target is 1.0807 and 1.1043 is now key resistance," Nomura projects.
JP Morgan: Make or break at 1.1087!
"A break above key-pivotal resistance at 1.1087 would be a game changer in Elliott terms and would at least challenge 1.1216/69 (weekly.daily trends).
Two consecutive lower hourly closes below 1.0840 (hourly Ichimoku-lagging) would on the other hand signal a top in place and would challenge the lower T-junction at 1.0642 (minor 76.4 %)," JPM argues.
Week Ahead: Cautious Yellen Could Trigger A Sell The Fact Reaction We expect the Fed to hike by 25bp but lower the glide path for rates in the next three years. In addition, the Fed should maintain its subdued outlook for inflation and could cut its projections for the unemployment rate. The press conference and the updated set of forecasts should be consistent with market expectations of a data-dependent but very cautious tightening cycle ahead.
Markets are attaching an 80% chance to a December lift-off and the removal of the residual uncertainty should support USD. That said, we expect the markets to respond more strongly to changes in the Fed outlook beyond lift-off. We expect the Fed cautiousness on inflation and growth to persist, and this could mean USD will struggle to extend any gains beyond the recent highs after the meeting.
The Fed’s cautiousness could also have a negative impact on market risk sentiment, especially if it fuels global growth and inflation fears. As a result, a ‘dovish’ Fed hike could leave commodity and risk-correlated currencies vulnerable.
Potential disappointments from New Zealand GDP and Canadian CPI could weigh on NZD and CAD, respectively. NOK and SEK could suffer as well at the hands of Norges Bank and Riksbank.
USD has lost some ground against EUR, JPY and CHF of late. While a Fed lift-off could revive demand for policy divergence trades and help the USD, a renewed deterioration in market risk sentiment could prop up the G10 safe-haven currencies to a degree. We remain bullish USD against JPY and CHF as medium-term trades.
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Historic Fed Decision – All the updates The Federal Reserve is expected to raise rates for the first time since 2006. Will it indeed go ahead? How will the US dollar react? What will the Fed tell us regarding the next moves?
This page features every related update: from the background, through the various previews and scenarios and then the actual news from the release, Yellen’s press conference and the aftermath of course. All the updates right here:
Draghi says ECB must and will bring inflation back to target ECB president now up to the rostrum
All tame stuff so far
EURUSD still 1.0952
Speech now up on ECB site
The tools we have deployed since June 2014 are producing the intended effects, said Mario Draghi in a speech in Bologna today.Following the recalibration of our instruments decided by the Governing Council earlier this month, the ECB expects inflation to return to its objective without undue delay. The President also said that if the ECB had to intensify the use of its instruments to ensure that it achieves its price stability mandate, it would.
However, while monetary policy can deliver price stability, that alone does not guarantee lasting prosperity. To have a structural recovery we need to raise not just current growth but potential growth as well.The key to this is higher investment. Investment has been held back in the euro area by three things: weak demand dynamics, the still-high private debt overhang and fragile private sector confidence.
The euro area today needs to take additional steps, alongside supporting demand, to address the debt overhang and fragile confidence. Structural reforms are key to this end. It is clear that, in some countries, the large stock of non-performing loans (NPLs) is still preventing a stronger recovery in credit. All this explains why facilitating a work-out of NPLs has to be part of the package of policy actions to restore productive investment. The ongoing work towards a Capital Market Union (CMU) is an opportunity to accelerate progress also on this front. If we are to truly underpin confidence, it is important that, even while dealing with more pressing priorities, we do not lose sight of the need to complete our monetary union.
Euro Forecast By Global Banks
The dollar-euro is the most actively traded currency pair in the world. It is often what is meant when people ask where is the dollar trading.
Dollar bullish sentiment prevailed in 2015, but many large banks doubt that it will continue in 2016. This Great Graphic from the Wall Street Journal shows the euro forecasts of eleven major banks.
Indeed, it appears that only one of the eleven banks expect the euro to finish next year below parity ($1.00). Three banks, (N:HSFC_pb), (O:UBSI) and (N:JPM) have the euro closing next year above $1.10.
We suspect some economists had been looking for a greater euro decline this year and some may be correcting for this. Our forecasts did not have the euro falling below parity until toward the middle of 2016. We are not convinced that the ECB has exhausted its scope for easing and suspect it will be revisited in late Q2 16. Our longer-term views are not far from Goldman Sachs (N:GS) and Deutsche Bank (DE:DBKGn). We anticipate that before the Obama dollar rally is over, the euro will approach its historic lows.
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EUR/USD: Dollar Flattish After US Housing Data, FOMC Eyed Housing starts in the US improved 10.5% month-on-month in November, from 1,062K to 1,173K, while building permits accelerated from 1,161K to 1,289K, which represents 11.0% growth. Both indicators came out well above market estimates.
The breakdown of the data based on housing size indicates broad-based strength, as builders ramped up construction on traditional single-family homes as well as apartment buildings.
The greenback failed to react, as market participants are focusing on today's headline event in the evening and the EUR/USD pair was trading near daily lows around $1.0930 shortly after the release.
There are a number of possible outcomes from today's Federal Open Market Committee (FOMC) decision, but the Federal Reserve will most likely raise rates for the first time since 2006. Traders will eye the following statement, economic projections, the so-called dot plot and Chair Janet Yellen's conference.