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Marge Maresca

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Euro isn't strong enough for Draghi to talk it down - Growing scope for cable upside breakout

Posted by Marge Maresca on Sep 6, 2017 11:02:42 AM

Euro isn't strong enough for Draghi to talk it down
ECB chief Draghi is unlikely to talk the euro down this week as the currency isn't that strong. It is the dollar that is weak. EUR/USD is yet to recover half the losses that evolved under the ECB's dovish monetary policy having only narrowly avoided a drop below parity early this year. Adding to the notion that the euro and euro zone were failing, a move below parity would likely have resulted in intervention. The ECB has purchased euros at sub-parity levels, buying shortly after the euro's launch and again versus the yen to assist the BOJ a few years later. Notably, the ECB has not sold euros before. The euro is also still weak versus the timeline of ECB policy actions. EUR/USD traded a 1.3213-1.4168 range May 2009 when the buying of covered bonds/corp debt was announced. It was close to 1.4000 when Draghi promised all to save the euro zone, 1.36 when a negative deposit rate was introduced and 1.2109 Jauary 2015 when the expanded asset programme began.

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Topics: US FX Market Open

CNY rise to influence euro and JPY

Posted by Marge Maresca on Sep 4, 2017 11:57:46 AM

CNY rise to influence Euro and JPY

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Topics: US FX Market Open

US FX Market Open –Tuesday August 29, 2017: EUR/USD breezes through 1.2000-50

Posted by Marge Maresca on Aug 29, 2017 10:22:29 AM

EUR/USD's fast rise is a bullish sign
The ease at which EUR/USD is rising is a strong sign of more gains to come. Traders have been hesitant to turn long EUR/USD and this has led to a sustainable rise. Bets on a EUR/USD rally via cash are a mere 9 billion euros compared to bets on a EUR/USD fall in late 2014 which swelled to a much larger size of around 25 billion. Economists and analysts have shared traders lack of belief in a big EUR/USD rise. Furthermore the rapid break of 1.2000 makes it quite clear that options traders are also ill-prepared for a rise to these levels. While FX traders are poorly positioned, the current weak spot for stocks is fuel for a higher EUR. The single currency has fared well during risk averse periods and is supported by a huge current account surplus which. This position is held by USTs in bond markets where demand is driving down yields and weighing the USD.

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Topics: US FX Market Open

EUR/USD likely leads another dollar decline

Posted by Marge Maresca on Aug 25, 2017 11:19:06 AM

EUR/USD likely leads another dollar decline
Traders should expect a softer dollar and stronger EUR after Jackson Hole. Fed events this year have mostly been preceded by speculation about rate rises and followed by markets pricing out future Fed tightening. The amount of hikes priced by Fed funds over the next two years fell to a new low this week, suggesting the pattern is repeated today. Even if the Fed chair were to signal the possibility of another hike this year, huge yield advantages still favour many emerging market currencies. If she does not the dollar will go down broadly and is likely to underperform versus EUR. Draghi may try to dampen expectations for a taper but won't kill off the idea. Both the IFO, which is close to its 26 year peak, and solid eurozone PMI data support a stronger EUR. The key is that EUR/USD has consolidated huge gains near trend highs irrespective of large spec longs. If Draghi fails to quash hawks EUR/USD may fly.

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Topics: GBP/USD, EUR/USD

US FX Market Open –Tuesday August 22, 2017: US Dollar better bid through Europe

Posted by Marge Maresca on Aug 22, 2017 7:32:21 AM

 

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Topics: US FX Market Open

 

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