Credit Agricole about Greece After The Euro: The Greek saga continues - 1.0461 is real target in case of 'Greece After The Euro'

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Sergey Golubev, 2015.06.22 10:56

Societe Generale: Greece is not the biggest EUR/USD driver (based on efxnews article)

"You could be forgiven for thinking that the biggest driver of the EUR/USD rate is not Greek debt talks, but the pricing of the December 2016 Fed Funds futures contract. This closed on Friday at 1.02%, the lowest level since mid-May."

"Neither is high profile enough to change market thinking about Fed policy, which prices a 1% rise in rates over 18 months. All of which just suggests we will get a stronger dollar once a faster pace of fed rate hikes is priced in, but this needs a catalyst that today’s data won’t provide. In the meantime, we watch the combination of (super-low) Fed pricing and hope of a Greek deal boost risk sentiment and undermine the dollar for the start of the week."

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Sergey Golubev, 2015.06.22 11:53

Deutsche Bank - Durable Goods Orders and PCE are the next big data (based on efxnews article)

EUR/USD continues to grind higher as Greece continues to dominate the headlines.

"The main focus was the June Fed meeting where early year expectations of a hike this month now feel a long time ago. There was speculation that Yellen shifted her 2015 dot lower, although as our US economist noted it is hard to tell. With the Fed still in data-dependent mode, more convincing evidence of a Q2 growth pick-up is needed. This week’s May durable goods orders and PCE are the next big data," DB argues.

"In any case, the median FOMC forecast for 2015 remained at 0.625%, while forecasts for 2016 and 2017 fell 25 basis points...Alan Ruskin looked into what current forward rates imply for EUR/USD based on the past relationship of the cross to rate spreads. A Fed funds rate of 275bp versus a zero EUR overnight rate would imply a further 20 big figure move lower in the cross. Clearly, however, the burden of EUR/USD weakness now lies on the Fed. With the Fed still in data-dependent mode, more convincing evidence of a Q2 growth pick-up is needed," DB adds.