EUR/USD Technical Analysis At Year-End: 1.04 as a real valid target

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Sergey Golubev, 2015.07.10 09:24

BNP Paribas - How To Trade Greece's End-Game (based on efxnews article)

1. Sell EUR relief rallies against USD, GBP:

"This scenario produces a relief rally across most asset classes. European equities would rally and peripheral spreads would narrow. It is unlikely the EUR would appreciate broadly as it is difficult to argue that the single currency is trading at a discount to valuation. Outcome 1 would provide a catalyst for the re-establishment of EUR-funded carry trades," BNPP advises.

"Accordingly, the EUR should depreciate, especially against higher yielders such as the USD and GBP. A clear exception would be EURCHF, which is likely to rally in this scenario. The CHF has served as a safe-haven – as indicated by the net long exposure of +24.," BNPP projects.

2. Sell EUR/JPY:

"This is the scenario the market fears...We view that EURJPY shorts would perform even better in this scenario, as an anticipated delay to Fed tightening would weaken the USD," BNPP advises.

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Sergey Golubev, 2015.07.10 14:26

Morgan Stanley evaluated some long-term/short term scenarios concerning EUR in case of Greece (based on efxnews article)

Short-term evaluation:

• "Should Greece sign a deal, a short-term EUR rebound should be followed by EUR weakness as investors are likely to move back into EUR-funded carry positions."
  
• "Should Greece exit, the ECB may have to use its tool kit to keep sovereign spreads under control. Monetary easing should put the EUR under selling pressure. Ultimately, the ECB should be successful in controlling spreads, we believe."
  

Long-term evaluation:

• "A Grexit represents a fundamental shift for EMU with the loss of ‘irrevocability’ potentially turning the union into a club of fixed exchanges rates with the possibility to leave. Peripheral assets will have to trade at a risk premium, unless EMU authorities deepen integration via further banking union and fiscal integration steps. The ECB controlling sovereign spreads successfully could turn into a long-term EUR negative factor as it may not provide the necessary ‘wake-up call’ to European politicians to make the necessary reforms to avoid future market tension."

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Sergey Golubev, 2015.07.10 20:04

Canadian Imperial Bank of Commerce: 'Fed Chair Yellen Speaks about the economic outlook at The City Club of Cleveland' (based on efxnews article):

1. "A lot of what Yellen had to say could be filed away under the title “nothing new”, but there was one statement that stood out."
   
2. "One other new feature was a commentary on productivity, and therefore, on potential growth. She expressed concern over the weakness in productivity implied by the mix of solid jobs gains but a more mediocre track for GDP, suggesting she sees that mix as not entirely temporary. If potential growth is slower, that will imply that the GDP pace needed to get to full employment, and thereby require some rate hikes, is also lower."
3. "Further out, however, we’ve argued that slower trend growth is associated with a lower real neutral rate, as we tend to get less of a push for capacity-expanding capital spending at any given interest rate."
4. "Overall, the remarks will remind markets that they are pricing in a lower path for rate hikes than Yellen might be thinking at least for 2015, although there’s still a lot of uncertainty in her own mind on that score."