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11 May 2015
Forex news: Fade any EUR rallies – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities, suggest fading any EUR/USD rallies above 1.13, noting that an expected September Fed rate hike will keep the upside gains for euro limited.
Key Quotes
“US NFP data were, on the face of it, better than expected Friday but—there is always a “but” these days—revisions to the previous two months’ data (by a total of -39k) took the shine off the report.”
“June Fed rate hike calls have tapped out and the September calls are feeling a little less confident with the past week’s data doing nothing to lift expectations of a quick Q2 growth rebound (the Atlanta Fed’s GDPNow model is tracking 0.8% growth). Market-based Fed hike expectations continue to suggest that Q1 2016 is viewed as the most likely point for lift-off.”
“We count ourselves in the September camp still but we also feel a little less confident with that view at this point.”
“With the ECB still pressing ahead with QE, stronger real economy data from the EZ shouldn’t matter that much for the EUR and if the Fed hike is delayed, we may be in for a period of range trading as markets keep positioning light and powder dry for the latter part of the year when central bank policy divergence may be more obvious.”
“We don’t think there is much upside for EURUSD above 1.13—and we prefer to fade EUR rallies still. However, downside potential may be limited to the 1.07/1.08 zone absent any major improvement in the US macro backdrop.”
Key Quotes
“US NFP data were, on the face of it, better than expected Friday but—there is always a “but” these days—revisions to the previous two months’ data (by a total of -39k) took the shine off the report.”
“June Fed rate hike calls have tapped out and the September calls are feeling a little less confident with the past week’s data doing nothing to lift expectations of a quick Q2 growth rebound (the Atlanta Fed’s GDPNow model is tracking 0.8% growth). Market-based Fed hike expectations continue to suggest that Q1 2016 is viewed as the most likely point for lift-off.”
“We count ourselves in the September camp still but we also feel a little less confident with that view at this point.”
“With the ECB still pressing ahead with QE, stronger real economy data from the EZ shouldn’t matter that much for the EUR and if the Fed hike is delayed, we may be in for a period of range trading as markets keep positioning light and powder dry for the latter part of the year when central bank policy divergence may be more obvious.”
“We don’t think there is much upside for EURUSD above 1.13—and we prefer to fade EUR rallies still. However, downside potential may be limited to the 1.07/1.08 zone absent any major improvement in the US macro backdrop.”