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20 Aug 2015
EUR/USD still seen at 1.05 in 12-month – Rabobank
FXStreet (Edinburgh) - In the opinion of Jane Foley, Senior Currency Strategist at Rabobank, believes the pair could slip towards the 1.05 area within a year’s time.
Key Quotes
“Yesterday the ECB published current account data for June at a very healthy EUR25.4 bln”.
“The strength of this number helps explain why the EUR has this year been displaying safe haven qualities”.
“However, faced with continued slow growth and low inflation in the Eurozone, the ECB is unlikely to welcome the resilient tone of the EUR”.
“Given that the market is still short EURs (see graph), Draghi may find is difficult to pressure the EUR lower in the current environment since the carry trade only works properly when risk appetite is elevated”.
“The next ECB policy meeting is scheduled for September 3 and we will be watching the rhetoric of the ECB very closely”.
“As it stands we have been forecasting a modest trend lower in EUR/USD towards 1.05 on a 12 mth view”.
“However, the capital flight from EM market and the continued unwind of the carry trade suggests there is upward risk to our EUR forecasts and we will be evaluating this closely over the next couple of weeks”.
Key Quotes
“Yesterday the ECB published current account data for June at a very healthy EUR25.4 bln”.
“The strength of this number helps explain why the EUR has this year been displaying safe haven qualities”.
“However, faced with continued slow growth and low inflation in the Eurozone, the ECB is unlikely to welcome the resilient tone of the EUR”.
“Given that the market is still short EURs (see graph), Draghi may find is difficult to pressure the EUR lower in the current environment since the carry trade only works properly when risk appetite is elevated”.
“The next ECB policy meeting is scheduled for September 3 and we will be watching the rhetoric of the ECB very closely”.
“As it stands we have been forecasting a modest trend lower in EUR/USD towards 1.05 on a 12 mth view”.
“However, the capital flight from EM market and the continued unwind of the carry trade suggests there is upward risk to our EUR forecasts and we will be evaluating this closely over the next couple of weeks”.