Please note we have no additional sell signals and currently we suspect we will see further ranging. Current position: Short at 1.3171. Recommended trade: Stop 3075, target at 2750, 2680, 2400.Citi 3 June
- Market still aggressively long USD
- Citi argues that USD gains maybe less pronounced if exceeding expectations, while data disappointments could lead to unwinding of stretched USD-longs
- "According to Citi economists, it would take several NFP gains in the vicinity of 200K to make the Fed seriously consider tapering in coming months. Such an outcome (not Citi central scenario) could see the dollar bouncing across the board on the back of higher US yields," Citi adds.
Credit Agricole 3 June
- Euro held up reasonably well recently as investors paring back bets on more aggressive ECB easing on June 6.
- Even if the ECB refrains from any additional easing measures at this meeting, the EUR could still come under renewed selling pressure if the June macro staff projections signal growing concerns about further disinflation in the Eurozone.
- "In particular, midpoint forecasts showing headline inflation heading much lower than the previous projections of 1.6% YoY for 2013 and 1.3%YoY for 2014 could fuel speculations of more aggressive easing down the road. This should make the euro more attractive funding currency and could send it lower across the board," Citi clarifies.
- EUR supported recently by higher than expected German inflation in May and some more muted US labour data.
- Any EUR/USD levels near to 1.30 should prove unsustainable and that rallies are still a sell.
- Expect the ECB to keep the same dovish monetary policy stance compared to the last meeting. This means that ECB President Draghi will likely continue to leave all options open, including the possibility of cutting the deposit rate to negative territory. This is especially true as the central bank already has a view of balanced inflation risk. Hence the most recent data is unlikely to change their monetary policy stance.
- At the same time growth prospects remain muted and a higher trade weighted EUR may increase concerns about the currency’s impact on prices and export competitiveness again. Accordingly we expect no positive surprises from the ECB. On the contrary they will likely continue to ensure that monetary conditions are not tightening.
- Remain of the view that US growth prospects will continue to improve, which should be especially reflected in further improving consumer strength. Hence, expectations for the Fed to become less dovish on monetary policy should remain in tact, putting a floor below US rates and the USD
Morgan Stanley 31 May - spot @ 3030
Short 3050 as the bank looks for the USD to soon resume its broader recovery, and so sees limited upside for EUR/USD. The bank has a downside target of the November 2012 low at 1.2665, with a protective stop up at 1.3150. Now at 1.3029.Danske 30 May
Danske fades EURUSD recovery, sells at 2973 looking for a slide to the May 28 low of 1.2852, with a stop up at 1.3035. EUR/USD now at 1.2981 within the day's 1.2986-1.2934 range.Barclays 30 May
Looks for E/U to keep climbing but says through the 1.3090 trendline daily momentum is likely to become overbought, making further gains more difficult. Now at 1.3019, the bank will look to buy dips against support at 1.2975, looking for a pullback ahead of 1.3150.
BNP Paribas, Goldman, Citi, Deutshe, Nomura, ANZ, CBA, Westpac, UBS, RBS, Credit Suisse, HSBC, BBH, Scotiabank, Societe Generale
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