According to Jane Foley, Senior Currency Strategist at Rabobank, the solid tone in the USD and the prospect of a closer than expected rate hike by the Fed will keep the pair depressed.
Key Quotes
“During the latter half of last year we frequently argued that the recovery in the USD facilitated the move lower in EUR/USD”.
“In a period in which the ECB cut interest rates twice, the Federal Reserve was wrapping up its asset purchase programme and preparing the ground for a rate hike this year”.
“The strength of the January US employment report which showed both a rapidly tightening labour and a healthy increase in wage inflation reinforces the view that the Fed is likely to start hiking interest rates at a time when the ECB’s asset purchase plan still has a long way to run”.
“While the greenback rallied on the release of the January jobs report, there is risk that the market’s already long USD position could temper the pace of additional gains”.
“By contrast the market appears to still be short sterling. While politics is a feature for UK markets this year, there is reason why some investors could overlook this risk”.
Key Quotes
“During the latter half of last year we frequently argued that the recovery in the USD facilitated the move lower in EUR/USD”.
“In a period in which the ECB cut interest rates twice, the Federal Reserve was wrapping up its asset purchase programme and preparing the ground for a rate hike this year”.
“The strength of the January US employment report which showed both a rapidly tightening labour and a healthy increase in wage inflation reinforces the view that the Fed is likely to start hiking interest rates at a time when the ECB’s asset purchase plan still has a long way to run”.
“While the greenback rallied on the release of the January jobs report, there is risk that the market’s already long USD position could temper the pace of additional gains”.
“By contrast the market appears to still be short sterling. While politics is a feature for UK markets this year, there is reason why some investors could overlook this risk”.
