Credit Agricole
The EUR has been well supported of late, mainly on the back of both rising growth expectations and well supported medium- and long term rates. In our view there is scope EUR/USD to trend back to 1.36 and above over the coming few weeks.
The ECB’s forward guidance is unlikely to cap medium- and long term rates should incoming growth data continue to improve. This is especially true as according to the German Bundesbank forward guidance does not mean a change to the central bank’s policy stance. It will neither prevent them from raising rates should inflation pressure increase.
Elsewhere, investors’ expectations for the Fed to taper QE as soon as in September have been rising considerably of late. In our view such a scenario is increasingly priced in. This in turn suggests that there is little scope for US yields to rise considerably further, at least in the short-term. In our view investors’ focus is more likely to shift to Fed rate expectations, which are unlikely to increase anytime soon.
In terms of data this week’s focus will be on German GDP and business activity data as well as the release of the FOMC minutes from the July meeting.
The ECB’s forward guidance is unlikely to cap medium- and long term rates should incoming growth data continue to improve. This is especially true as according to the German Bundesbank forward guidance does not mean a change to the central bank’s policy stance. It will neither prevent them from raising rates should inflation pressure increase.
Elsewhere, investors’ expectations for the Fed to taper QE as soon as in September have been rising considerably of late. In our view such a scenario is increasingly priced in. This in turn suggests that there is little scope for US yields to rise considerably further, at least in the short-term. In our view investors’ focus is more likely to shift to Fed rate expectations, which are unlikely to increase anytime soon.
In terms of data this week’s focus will be on German GDP and business activity data as well as the release of the FOMC minutes from the July meeting.
regards,
oscarjp
The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects oscarjp-chrimatistikos current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.
The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects oscarjp-chrimatistikos current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.
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