28 Apr 2015
EUR/USD: Corporate earnings and data effect - Rabobank
FXStreet (Guatemala) - Jane Foley, Senior Currency Strategist at Rabobank noted the current fundamental conditions, in part, of the EUR/USD taking in to account the US corporate earning season, data and strength of the greenback.
Key Quotes:
"This week’s Federal Reserve policy meeting is failing to generate the excitement of recent Fed outings. The reason for this is most likely because it is difficult to argue with the fact that US economic data releases since the start of the year have been disappointing. Consequently there is little reason to expect the Fed to do much else but keep policy on hold for some months yet."
"Tomorrow’s release of Q1 GDP data is expected to show annualised growth of just 1% over the previous quarter, down from a report of 2.2 % saar q/q in Q4. Port strikes and bitterly cold weather at the start of the year have played a part in dampening down the pace of US economic activity. The other fact that has weighed on growth has been the strength of the USD"
"The recent round of US earnings report has brought several indications that USD strength has impacted the sales of corporate America. According to the FT, USD strength has wiped more that $20 bln from sales of the largest US companies that have already reported Q1 sales."
"Since earnings season is currently almost at the halfway stage, the FT estimate that this figure will increase. Companies have resorted to share buy backs and cost cutting exercises in order to boost earnings but corporate America is providing strong evidence that USD strength has already tightened monetary conditions. By contrast, an opposite effect is taking hold in Europe."
Key Quotes:
"This week’s Federal Reserve policy meeting is failing to generate the excitement of recent Fed outings. The reason for this is most likely because it is difficult to argue with the fact that US economic data releases since the start of the year have been disappointing. Consequently there is little reason to expect the Fed to do much else but keep policy on hold for some months yet."
"Tomorrow’s release of Q1 GDP data is expected to show annualised growth of just 1% over the previous quarter, down from a report of 2.2 % saar q/q in Q4. Port strikes and bitterly cold weather at the start of the year have played a part in dampening down the pace of US economic activity. The other fact that has weighed on growth has been the strength of the USD"
"The recent round of US earnings report has brought several indications that USD strength has impacted the sales of corporate America. According to the FT, USD strength has wiped more that $20 bln from sales of the largest US companies that have already reported Q1 sales."
"Since earnings season is currently almost at the halfway stage, the FT estimate that this figure will increase. Companies have resorted to share buy backs and cost cutting exercises in order to boost earnings but corporate America is providing strong evidence that USD strength has already tightened monetary conditions. By contrast, an opposite effect is taking hold in Europe."