Euro Dollar Rate Forecasts for 2014-2015 - page 5
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It's good or bad if EURO fall down?
It's good or bad if EURO fall down?
Good for EU exports
Bad for euro using people - implied inflation that is not shown anywhere. 30% just in rate change and they still claim that inflation is too low
Good for EU exports Bad for euro using people - implied inflation that is not shown anywhere. 30% just in rate change and they still claim that inflation is too low
Thanks! Now this more clear.
Euro to Dollar: Parity Forecast by Swissquote
The euro exchange rate complex is widely tipped to lose value in coming months – but what are the realistic target points those with an eye on the world’s most important currency market place should be looking out for?
“In the longer term, the symmetrical triangle favours further weakness towards parity” – Luc Luyet, Swissquote Bank.
As we enter a new month the dollar is seen outperforming once more while the euro bears much of the pressure.
Bond markets are the driver.
“European bond yields nosedived, probably as investors anticipated on the start of ECB QE. At the same time, the dollar got, albeit limited, interest rate support as US inflation data were OK. The combination of both pushed EUR/USD off a cliff,” summarises Piet Lammens at KBC Markets in a note to clients at the close of February.
Be aware: The above quotes and graphic representations are taken off the wholesale markets. Your bank will affix a spread at their discretion when passing on currency. However, an independent FX provider will seek to undercut your bank's offer, thereby delivering up to 5% more currency in some instances. Find out more.
Forecasting a Test of Parity in Euro Dollar
As the graphics on this page attest, the euro strengthened over the course of recent weeks with a base formation occurring against the dollar.
Those betting on a break to the upside will have been disappointed as the return of volatility confirms the longer-term downtrend looks intent on re-asserting itself.
What are the target levels to look out for?
Luc Luyet at Swissquote Bank has looked at recent action in the euro dollar and tells us:
“EURUSD has broken to the downside out of the range defined by the support at 1.1262 and the resistance at 1.1450.
“Further weakness towards the support at 1.1098 is favoured. Hourly resistances can now be found at 1.1279 (20/02/2015 low) and 1.1389 (see also the declining channel).”
read more
USD Consolidates Then Moves Up: Themes, Forecasts, Risks – BofA Merrill
After some range trading for the US dollar during February, what’s next for the greenback?
Here are views on the themes that are set to rock the US dollar and forecasts for a few pairs:
Here is their view :
The following is Bank of America Merrill Lynch’s comprehensive outlook for the USD including its themes, forecasts, and risks.
Themes: economic strength, policy divergence support USD.
The dollar broadly traded in a range in February as speculative investors pared back USD longs in 4 of the past 5 weeks. This is consistent with our view that stretched USD positioning could limit near-term upside. Chair Yellen remained optimistic about the economy in her Semi-Annual Congressional testimony, but given concerns about a premature tightening of financial conditions took on a more balanced tone than the market expected. However, we continue to expect policy divergence to be a continued driver of USD strength over the balance of 2015, evidenced by the 280,000 pace of non-farm payrolls growth.
Additionally, overseas policy is moving in the other direction with the Reserve Bank of Australia cutting rates and the Riksbank cutting rates and engaging in small-scale QE, pushing policy divergence from both sides of the coin. Despite the medium-term picture for policy divergence playing out largely as we expect, long USD positioning is still significant, while US data surprises have decelerated aggressively. We think the trade is vulnerable to shocks as its unlikely both legs of the decoupling trade (higher equities and USD) can continue without creating problems.
Forecasts: still expecting broad USD strength
We leave our core G3 forecasts unchanged, expecting EUR-USD and USD-JPY to finish the year at 1.10 and 123 respectively. Outside of the G3, in dollar-bloc, we bring expected AUD depreciation forward, now expecting AUD-USD to finish 2015 at 0.73 (from 0.77). All other G10 forecasts remain unchanged. In EM, we have incremental changes, pushing up some forecasts for USD-CNY, USD-MXN and USD-BRL.
Risks: inflation.
A continued decline in realized and forward inflation in the US would keep the Fed on hold and delay the timing of our expected USD appreciation.
source
Will EUR/USD bottom out on NFP day? It happened before
What began as a dip to test low waters under 1.10 was followed up by a renewed fall. Draghi’s drag is extending towards the NFP, with EUR/USD setting new low after new low, in levels last seen in September 2003 – yes, 11.5 years ago.
But is it about to bottom out? There is some kind of pattern here.
In the past few months, the EUR/USD has been clear: down. But as always with forex, it is never a one way street. There are always corrections, some of the “dead cat” nature – minor bounces that are followed by bigger falls.
Where have these bounces happened more often than not? Right after the NFP reports.
Have these NFP reports been that bad? Not at all. Most of them ranged between good and excellent.
The pattern we are seeing here is:
Will we see it happening again now?
source
EUR/USD: 1.05 Next Target En-Route To Parity; Downtrend Firmly In Place – ANZ
EUR/USD crashed quite sharply following the one two punch from Draghi and the NFP, closing at 1.0846. This may not be the end.
Brian Martin & Dylan Eades of ANZ foresee the next levels down the road, and explain with a chart:
Here is their view :
“Price action has confirmed that the euro is being driven by actual and expected portfolio rebalancing effects and that the market is ignoring the improving growth and inflation outlook.
For now though, the FX markets are ignoring the improved growth outlook. Instead negative interest rates and the expectations of persistent difference in the policy path with the US are weighing on EUR/USD. The February NFP release was materially stronger than expected. NFPs rose by 295k and the unemployment rate fell to 5.5% from 5.7%. Whilst earnings growth remains soft at 2.0% y/y, expectations are now firmly focused on a removal of the reference to “patience” at the March FOMC meeting. That would confirm that the FOMC has moved away from date dependency in its forward guidance to data dependency.
If, as we expect, the activity data firms again in coming months, then the FOMC remains on course to begin normalising interest rates soon, probably at the June meeting. In the interim, the USD can continue to take the strain for monetary tightening.
Further downside risks seem probable and the break of 1.10 points to a test of 1.05, or possibly parity.”
Brian Martin & Dylan Eades – ANZ
source
It will go bellow 1.05000 very soon
How Much Of A USD Strength Into Upcoming FOMC? – Goldman
After another strong jobs report from the US expectations have risen for a removal of forward guidance: no more patience from the Fed regarding rates.
But how can that affect the dollar? Robin Brooks, George Cole and Michael Cahill analyze, and see room for more:
Here is their view :
“One reason we adopted a Dollar-bullish stance last year is that we expected Fed forward guidance to fade as the recovery progressed.
Since then, the shift from “considerable time” to “patient” and recent Congressional testimony by Chair Yellen, which talked about a meeting-by-meeting decision on lift-off, have continued to dilute forward guidance, and this month is likely to see a further shift towards data dependence.
Based on the sensitivity of 2-year US yields to data surprises, we think the front end is about two-thirds of the way back to pricing full data dependence, in line with the most recent Macro Rates Analyst, which argues that US rate volatility, including in the front end, has more room to rise.
There is therefore still room for the risk-premium in front-end rates to go up, regardless of whether the Fed hikes in June, September or later (our US economists continue to expect September).
Based on past Fed meetings that downgraded forward guidance, this should translate into Dollar strength around the upcoming FOMC meeting of 2-3%.“
Robin Brooks, George Cole and Michael Cahill – Goldman Sachs
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