News and other updates

BULLISH -- Danske 3 month forecasts:

• EURUSD to hit 1.33 (now trades 3044)
• [US growth] USA is growing softly.
• [US QE] Thinks the market will continue to expect Fed to postpone QE exit.
• [Positioning] Sees market positioning is short, so short covering will support the pair.
• [Yen QE] Surprised by strength of yen crossflow support.
• [Eurozone] Expects EZ tail-risk concerns to fade.
• EURGBP to hit 0.88 (now trades 8562)
• Thinks market has underestimated risk of BoE easing.
• EURJPY to hit 136 (now 130.18)
• Yen to continue weakening due to fiscal tightening and monetary easing.

BULLISH -- Goldman:

• EURUSD to hit 1.36-1.40
• External balance of Eurozone is solid vs USA
• Expects eurozone risk premia to unwind

BULLISH -- JP Morgan

• EURUSD to hit 1.32 for Q2...and 1.34 for Q4
• Japanese investors may begin purchasing ITA/SPA debt?
• EZ PMI moves above 50?
• LTRO repayments imply less than 200B of excess liquidity?
• US debt ceiling debate spurs interest in other reserve currencies?
• RISKS
• Italy moves to 2nd elections?
• Fed signals early end to QE?
• ECB cuts rates 50bps due to recession?
• Downgrade of Spain/Italy to sub-investment grade?

BEARISH -- Credit Agricole:

• Sell EURUSD on rallies
• Particularly if ECB cut rates due to poor data and inflation
• German growth prospects muted given lacklustre external demand
• Risk of ECB monetary easing is rising

BEARISH -- BoNZ

• Expects EURUSD to be 1.27 in 2 months.

News and events this week:

1. Tues: Flash PMIs
2. Wed: German IFO
3. Fri: USA Q1 GDP