8 May 2014
EUR/USD may have to wait for 1.4000 - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe General, sees EUR bulls would have to wait a bit longer to test 1.4000...
Key Quotes
"VE Day has some of Europe off, and it may be another testing day for dollar bulls - particularly relative to European currencies. The ECB may choose to end the sterilisation of asset purchases under the SMP (Securities Markets Programme) and the press conference will doubtless see more assurances about the ECB having more tools available to act if needed, but will that be enough to prevent all-out assault on EUR/USD 1.40."
"My long and medium-term models suggest the Euro is a little rich already, relative to where peripheral bond spreads and relative rates are, but there are options barriers above 1.40 and the FX market is hunting them down. Meanwhile, the UK MPC is likely to leave rates on hold."
"Formal activation of Phase 2 of the forward guidance framework, which looks at a wider range of indicators than unemployment, will give them some comfort about keeping rates on hold but the FX market may buy more GBP/USD regardless. The FPC meets again next month, and action to cool the housing market by other means than higher rates, can't come soon enough."
Key Quotes
"VE Day has some of Europe off, and it may be another testing day for dollar bulls - particularly relative to European currencies. The ECB may choose to end the sterilisation of asset purchases under the SMP (Securities Markets Programme) and the press conference will doubtless see more assurances about the ECB having more tools available to act if needed, but will that be enough to prevent all-out assault on EUR/USD 1.40."
"My long and medium-term models suggest the Euro is a little rich already, relative to where peripheral bond spreads and relative rates are, but there are options barriers above 1.40 and the FX market is hunting them down. Meanwhile, the UK MPC is likely to leave rates on hold."
"Formal activation of Phase 2 of the forward guidance framework, which looks at a wider range of indicators than unemployment, will give them some comfort about keeping rates on hold but the FX market may buy more GBP/USD regardless. The FPC meets again next month, and action to cool the housing market by other means than higher rates, can't come soon enough."