Euro Dollar Rate Forecasts for 2014-2015 - page 36
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Plenty Of Scope To Rebuild EUR Shorts - BNPP BNP Paribas quant model 'STEER' continues to signal scope for a further EUR/USD decline with an estimated fair value of around 1.05.
"The decline in the eurozone front-end yields key driver of EURUSD. The euro 2y swap rate fell from +4bp to -3bp and our rates strategists see scope for a further decline to -7bp," BNPP notes.
Moreover, BNP Paribas FX Positioning Analysis indicates that there is plenty of scope for EUR shorts to be rebuilt towards levels that prevailed earlier this year.
BNPP maintains a short EUR/USD position from 1.1450, targeting 1.09.
EUR/USD: How Low Can It Go Into Year-End? - Barclays "The ECB surprised markets last week, strongly hinting additional policy stimulus at its December meeting, when the committee updates its economic projections. We continue to think that a time extension of the PSPP program by 6-9 months is the most likely policy action this year.
As we have argued, proactive ECB action will likely act as a catalyst for a renewed push lower in the EUR, helping EURUSD break its multi-month range and re-instating some conviction in a renewed EUR downtrend.
A 10bp deposit rate cut, to which the market now assigns a 40% probability to happen in December, remains the most effective way to sustainably weaken the EUR, in our view, but is not our baseline case for 2015. Instead, we think it would be more likely deployed next year, following QE extension in December. The likely trigger for a deposit rate cut, in our view, would be a further material appreciation of the euro, possibly in a scenario where the Fed remains on hold for longer.
We continue to forecast EURUSD to depreciate to 1.03 by year-end."
If Short EUR/USD, What To Do Now? - UOB The key 1.0970 support was finally taken out and the clear break led to a sharp drop to 1.0895/00, notes UOB Group.
"The bearish phase that started last Friday is still intact and the weak daily closing yesterday suggests further downward pressure in the coming days," UOB projects.
"That said, the down-move is clearly oversold now especially on the shorter-term charts and we would suggest taking some profit near the next strong support at 1.0810/15," UOB advises.
BNPP Booked 550-Pips Profit On EUR/USD Short; Turned Neutral Into Year-End The last leg lower in EUR/USD pushed the pair through BNP Paribas' 1.09 target on its short trade position from 1.1450. BNPP closed the trade on 550 pips profit or approximately 4.8% gain.
"EURUSD is now trading in line with our year-end target and we turn more neutral on the pair into year-end," BNPP argues.
"The risk now is that the US data comes in too weak to support rate hike expectations or that ECB speakers sound more neutral in light of the big move in the effective exchange rate over the past few days," BNPP adds.
FX Signals From Month-End Fixing Models - Barclays Barclays Capital's month-end rebalancing model generates strong USD selling signals across the board.
"The passive rebalancing model at month-end points to generous amounts of USD selling against major currencies.
Equity markets edged substantially higher across developed economies as a result of reduced risk aversion and support coming from monetary policy easing by major central banks.
US equities posted the largest increase in market value relative to the rest of the world, due to the large size of the American market, while gains in bond markets were moderate and the USD remained practically unchanged on an effective basis," Barclays clarifies.
Barclays month-end fixing model provides signals for trading FX on the last tarding day of the month. The model provides signals from '+++' through neutral to '---' to indicate the strength of this month's signal relative to its own history.
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