Euro Dollar Rate Forecasts for 2014-2015 - page 37
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EUR/USD Outlook: Euro to Fight for $1.11, Dollar Bulls Struggle
It looks like the US dollar bulls are having some serious difficulties to hold the pair below the $1.10 mark and the pair jumped sharply from its post-FOMC lows at $1.09 to trade above $1.1050 on Friday.
Despite surging odds for a December rate hike, the US dollar was losing broadly at the end of the previous week, which did not set a good entry point for this week's trading.
Further advancement toward $1.11 is possible, with this area being the crucial resistance for now.
Traders will watch a set of macro data during the week. Monday promises the Institute for Supply Management's manufacturing PMI, with the important subindex of paid prices projected to increase to 39.7 from 38.0 previously. On Wednesday, the ADP employment report will be published, along with the ISM's non-manufacturing PMI and both are expected to decline from September levels.
From the euro perspective, manufacturing PMIs will be released across the euro zone on Monday, followed by ECB President Mario Draghi, who is due to speak in Frankfurt on Tuesday. On Wednesday, the services PMIs from the euro zone will be published.
Most importantly, Friday will see the non-farm payrolls with the unemployment rate. The payrolls should rise from 142,000 to 180,000, while the unemployment rate is expected to remain at 5.1%. A positive result on Friday will increase the odds for a December rate hike and vice versa, with the US dollar expected to be very sensitive and volatile.
EUR/USD Outlook: Euro to Fight for $1.11, Dollar Bulls Struggle It looks like the US dollar bulls are having some serious difficulties to hold the pair below the $1.10 mark and the pair jumped sharply from its post-FOMC lows at $1.09 to trade above $1.1050 on Friday.
Despite surging odds for a December rate hike, the US dollar was losing broadly at the end of the previous week, which did not set a good entry point for this week's trading.
Further advancement toward $1.11 is possible, with this area being the crucial resistance for now.
Traders will watch a set of macro data during the week. Monday promises the Institute for Supply Management's manufacturing PMI, with the important subindex of paid prices projected to increase to 39.7 from 38.0 previously. On Wednesday, the ADP employment report will be published, along with the ISM's non-manufacturing PMI and both are expected to decline from September levels.
From the euro perspective, manufacturing PMIs will be released across the euro zone on Monday, followed by ECB President Mario Draghi, who is due to speak in Frankfurt on Tuesday. On Wednesday, the services PMIs from the euro zone will be published.
Most importantly, Friday will see the non-farm payrolls with the unemployment rate. The payrolls should rise from 142,000 to 180,000, while the unemployment rate is expected to remain at 5.1%. A positive result on Friday will increase the odds for a December rate hike and vice versa, with the US dollar expected to be very sensitive and volatile.
"It is still far from clear that the Fed will begin to raise interest rates any sooner than the markets have been anticipating. While a December move is perhaps now back in play, much will still depend on the US economic data over the next few weeks, as well as developments overseas, notably in China," analysts at Capital Economics wrote on Friday.
Forex - Morgan Stanley Trims EUR/USD F'cast on ECB's Early Christmas Present Morgan Stanley analyst team on Monday cut its euro/dollar forecasts, as they believe that the European Central Bank (ECB) will give markets an 'early Christmas present' in the form of further monetary easing before the end of the year.
The investment bank behemoth now forecasts the euro at $1.03 against the US dollar by the end of the first quarter of next year, compared with $1.11 previously.
"We expect the euro to come under renewed selling pressure going into the end of the year and early next year as a result of the increased potential for further easing from the ECB," Morgan Stanley currency strategist Ian Stannard wrote in a note.
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UBS happy with EURUSD shorts as their stop remains intact Last week UBS said shorts from 1.1060 was the trade and their stop at the 200 dma 1.1110 remains the line in the sand This week their trade remains the same and they say that they are planning to add ahead of 1.1090. Their first target is the Friday low at 1.0987, then 1.0950
EUR/USD: Breach Of Flag Formation EUR/USD has breached support at 1.1085 and more importantly the flag formation within which the corrective recovery evolved, notes SocGen.
"The correction has achieved our initial target of 1.0940 and is likely to continue towards July lows of 1.08.
With weekly indicator at resistance, retest of 1.05/1.04 is not ruled out. 1.1510 should cap upside," SocGen projects.
Credit Suisse Trade Of The Week: Sell EUR/USD Currency investors should consider selling EUR/USD this week, advises Credit Suisse in its weekly FX pick to clients.
"The monetary policy divergence has re-emerged, in our view. We would stick to EUR shorts, following the ECB's dovish surprise at its last meeting as the threat of more negative front-end rates could be fairly effective in pushing funds out - for instance reserve managers should be sensitive to negative rates given the short duration of their fixed income holdings.
Meanwhile, the Fed has signalled December is on the table and data this week should broadly support this notion," CS says as a rationale behind this call.
"We expect unemployment to fall further to 5.0% (consensus is 5.1%), non-farm payrolls print to recover to 170k from 140k (consensus 180k) with positive backward revisions to the August and September prints (historically these two months tend to be revised up by 80k on average)," CS projects.
Here Is How The USD Performs When The Fed Tightens - Deutsche Bank "While the USD has not traded particularly well in a number of Fed tightening cycles, in the two big USD cycles of the early 1980s and late 1990s the USD did surge ahead.
A unique aspect of this big USD cycle, is that even a truncated Fed tightening cycle will contrast with other major Fed cycles where a majority of G10 Central Banks were either tightening with the Fed (like 1994), and/or their bond markets were attractive relative to the US (like 2004-6).
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