15 Apr 2015
Major risk for euro lies in Draghi’s Q&A session, EUR/USD weakness expected – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities remain of the view that the major risk for the single currency lies in the Q&A session in the press conference, and further expect EUR/USD to move back to test the 1.05 area.
Key Quotes
“EURUSD rallied on ‘disappointing’ US retail sales data yesterday; the 0.9% m/m headline gain missed expectations and while not wholly bad, the weaker than expected outcome undermined hopes that the US economy was poised to bounce in Q2.”
“It’s still too early to judge that and the US economy does have history on its side in this respect (GDP growth has averaged a little over 0.6% in Q1 over the last five years but then gone on to record growth nearer 3% on average in each of the next three quarters).”
“We get an early look at April with the US Empire Survey; a positive an upside surprise in line with our expectations might lift the retail sales-driven gloom a little and support the USD but attention will quickly turn to the ECB press conference.”
“We assume [...] no major changes in President Draghi’s opening statement; the risk for the EUR really comes in the Q&A where we expect no concessions to the tapering talk; there have been some positive signs from the real economy (PMI data) but inflation remains uncomfortably low and we think President Draghi will stress full implementation of the QE programme, driving EURUSD back towards the 1.05 area at least.”
Key Quotes
“EURUSD rallied on ‘disappointing’ US retail sales data yesterday; the 0.9% m/m headline gain missed expectations and while not wholly bad, the weaker than expected outcome undermined hopes that the US economy was poised to bounce in Q2.”
“It’s still too early to judge that and the US economy does have history on its side in this respect (GDP growth has averaged a little over 0.6% in Q1 over the last five years but then gone on to record growth nearer 3% on average in each of the next three quarters).”
“We get an early look at April with the US Empire Survey; a positive an upside surprise in line with our expectations might lift the retail sales-driven gloom a little and support the USD but attention will quickly turn to the ECB press conference.”
“We assume [...] no major changes in President Draghi’s opening statement; the risk for the EUR really comes in the Q&A where we expect no concessions to the tapering talk; there have been some positive signs from the real economy (PMI data) but inflation remains uncomfortably low and we think President Draghi will stress full implementation of the QE programme, driving EURUSD back towards the 1.05 area at least.”