EUR/USD is Overvalued - BNPP
Research Team at BNP Paribas, remain positioned for further EUR/JPY and EUR/AUD upside.
Key Quotes
“We
believe USD positioning is getting increasingly short (-19 on our scale
of -50 to +50) and more importantly, US front-end yields have finally
adjusted to levels where risks are more skewed to the upside. US 2-year
yields have fallen from 110 bps at the start of 2016 to 75 bps now.
These levels are now consistent with our Rates Strategists’ year end
targets.
Our STEER™ model now suggests EUR/USD is rich to key
drivers with the model signals fair value at 1.1366. STEER has proven to
be a reliable indicator of short-term EUR/USD movements this year.
Today,
we expect a weaker reading on the ADP payroll report and the employment
component of the services ISM could also point to a slowing in payroll
growth ahead of Friday’s release. We forecast a slowdown to just 175K
for payrolls growth on Friday.”
