31 Jul 2013
Flash: Today is the big day, USD to be pressured - SocGen
FXstreet.com (Barcelona) - Today is the big day with a massive GDP revision of 3%, ADP and the FOMC decision (only a statement), notes Sebastien Galy, FX Strategist at Societe Generale.
Key Quotes
"The odds are that the steady normalization of the front end of the UST curve should continue as the Fed clarifies its response function. Front end US Treasuries can be seen as pricing in a jump risk for the eventual rates tightening at some point down the road. This volatility premium seems overly expensive in front end months."
"The USD should continue to be under some downward pressure with EUR/USD continuing to drift higher. A break of the downtrend channel at 1.3336 would open the way for 1.34, where it would start to be time to short EUR/USD."
"Later prints of ADP, NFP and just the basic economic momentum in the US means that tapering will eventually come back with a thud. That may hit the back end of the UST curve a bit more which would attract Japanese life insurers."
Key Quotes
"The odds are that the steady normalization of the front end of the UST curve should continue as the Fed clarifies its response function. Front end US Treasuries can be seen as pricing in a jump risk for the eventual rates tightening at some point down the road. This volatility premium seems overly expensive in front end months."
"The USD should continue to be under some downward pressure with EUR/USD continuing to drift higher. A break of the downtrend channel at 1.3336 would open the way for 1.34, where it would start to be time to short EUR/USD."
"Later prints of ADP, NFP and just the basic economic momentum in the US means that tapering will eventually come back with a thud. That may hit the back end of the UST curve a bit more which would attract Japanese life insurers."