Rabobank - "EUR/USD: A weaker euro would be supportive for growth in peripheral Europe.
However, not all currencies can be simultaneously weak and the EUR is losing the battle. Insofar as the market remains obsessed with the timing of Fed tapering, threats of further policy action from the ECB are proving to have limited power over the direction of EUR/USD. Not only that, but the strength of Germany’s external sector and current account remains a source of strength for the EUR. The…
Added by Francesc Riverola on December 4, 2013 at 11:04am — No Comments
Rabobank - "The US is heading for two fiscal policy deadlines that will lead to a two-stage game of chicken between Democrats and Republicans: the continuing resolution for the new fiscal year that starts on October 1 and the need to raise the debt ceiling by October 17. Failure to adopt a continuing resolution will lead to a government shutdown, while not raising the debt ceiling will lead to a government default.
(...) On balance, the market impact of a government shutdown is limited.…
Added by Francesc Riverola on September 26, 2013 at 4:11pm — No Comments
Rabobank - "Since Friday’s US payrolls data failed to clarify the outlook for Fed tapering, it also failed to bring much fresh direction for EUR/USD. We remain of the view that the Fed will probably dip its toe in the tapering pond by announcing a USD10 bln reduction in the amount of its monthly asset purchases at the September 17-18 FOMC. We also maintain that as the US economy strengthens and the Fed gets its teeth into tapering that the USD will strengthen. That said, the lack of vigour…Continue
Added by Francesc Riverola on September 9, 2013 at 9:41am — No Comments
Rabobank - "Late August brought signs that the market was taking renewed interest in the USD. This was largely the result of a step-up in risk stemming from Syria which resulted in an increase in demand for a safe-haven. Over the coming months developments in the mid-East could continue to impact the direction of the USD. That said, the USD is also likely to be heavily influenced by economic developments and in particular the policy decisions taken by the FOMC. CFTC data suggest that…Continue
Added by Francesc Riverola on September 4, 2013 at 4:21pm — No Comments
Rabobank - "IMM Net Positioning as at 27 August 2013:
- EUR net longs continued to rise, edging up to a high since May 2011.
- Yet again USD longs fell slightly but they still remain in positive territory. We expect our structurally bullish USD view to be reflected by market positioning going forward.
- JPY shorts increased by more than the prior week’s reduction. USD/JPY continues to flirt with the 100 handle but has not stood north of there since late July.
Added by Francesc Riverola on September 2, 2013 at 11:00am — No Comments
Rabobank - "Between Fed Chairman Bernanke’s speech last week and his testimony this afternoon, there has been a big change in market positioning. Last week the USD was confidently expecting Bernanke to provide more detail about when the Fed would start to taper QE, instead the market received the message that policy would stay accommodative for some time. Now that USD positions have been shortened there is less potential upside in EUR/USD following Bernanke remarks this afternoon. We expect…Continue
Added by Francesc Riverola on July 17, 2013 at 2:22pm — No Comments
Rabobank - "Even if UK fundamentals suggest that sterling should be offer some support at current levels another burst of broad-based USD strength would still leave cable vulnerable. Later this week Fed chairman Bernanke will be speaking. He may give the market more reason to be optimistic on the US economic recovery. If this is the case cable will clearly be vulnerable. However, there is also a strong risk that Bernanke may also push back against the view that the tapering of QE is almost…Continue
Added by Francesc Riverola on July 9, 2013 at 9:22am — No Comments
Rabobank - "Central bankers and US payrolls data appeared to leave the outlook for EUR/USD and GBP/USD cut and dried last week. Both the ECB and BoE were dovish while the better headline numbers within the US labour report has encouraged speculation of tapering of QE from the Fed as soon as September. Although there is little US data scheduled this week, investors will have the benefit of the minutes of the June FOMC meeting in addition to a speech from Fed President Bernanke later in the…Continue
Added by Francesc Riverola on July 8, 2013 at 11:04am — No Comments
Rabobank - "The last few weeks have also seen the EUR push to better levels vs. the JPY. The gains, however have been moderate and EUR/JPY remains well below the levels achieved in May. We remain of the view that the yen can weaken over the medium term. The BoJ in April launched an extremely accommodative monetary policy and this should feed into a softer currency. However, the recent pullback in risk appetite is not conducive to significant yen slippage given the currency’s safe haven…Continue
Added by Francesc Riverola on July 3, 2013 at 5:49pm — No Comments
Rabobank - "Although we expect no policy action at this week’s meeting (June 18-19), the FOMC is scheduled to update its economic projections and Bernanke will hold a post-meeting press conference. The markets will follow the latter with even more interest than usual. While the Fed Chairman may attempt to give more clarity about tapering off QE3, it will be difficult to reduce market uncertainty because there does not seem to be a consensus in the FOMC on an explicit criterion for stopping…Continue
Added by Francesc Riverola on June 18, 2013 at 1:55pm — No Comments
Rabobank - "The USD has not performed well over the past month. In the G10 space only the AUD and the NZD have fared worse. We have linked the recent softness of the greenback to positioning and the fact that the market entered into Q2 structurally long. This left the USD vulnerable to disappointing US economic data and the recognition that the pace of the domestic expansion has slowed relative to Q1. As the market continues to adjust the level of its long positions, there is the possibility…Continue
Added by Francesc Riverola on June 16, 2013 at 5:59pm — No Comments
Rabobank - "Over the past month or so, markets have become engrossed in the effort of trying to forecast when the Federal Reserve will start to taper the amount of its monthly asset purchases and this has been reflected in the movements of the USD index. The first half of May started out well for the USD following the release of better than expected US non- farm payrolls data. More recently, weaker economic releases have led to the assumption that perhaps the market has got ahead of itself…Continue
Added by Francesc Riverola on June 10, 2013 at 7:25pm — No Comments
Rabobank - "The June Bank of England policy meeting was never likely to be a game changer for sterling. That said, the UK economy has entered into an interesting phase. Finally there are sufficient signs of improvement in data releases to indicate that the country may be entering into a nascent economic recovery. The slightly better tone of economic data will be a relief to Governor King who retires at the end of the month after a difficult tenure. However, King has still left plenty of work…Continue
Added by Francesc Riverola on June 7, 2013 at 5:51pm — No Comments
Rabobank - "Over the past few years the ‘resilience’ of EUR/USD has surprised many investors. Even as the Eurozone crisis raged, the weakest level that EUR/USD achieved was a brief dip to 1.1877 back in June 2010. One of the most obvious explanations for this ‘resilience’ has been the weakness of the USD. In 2012 the USD was the second weakest performing G10 currency after the JPY. Insofar as the Fed stepped up QE towards the end of 2012, this is perhaps not surprising. (...), it is…Continue
Added by Francesc Riverola on May 24, 2013 at 12:30pm — No Comments
Rabobank - "Early May, (...), has brought better US data and therefore a new least of life for the greenback. Better US data has increased the market’s sensitivity to speculation regarding when the Fed could start to reduce the amount of its monthly $85 bln asset purchases. (...) Despite this better tone, we are sceptical on the ability of the USD to push aggressively higher from current levels. The fiscal consolidation announced in the US this year will continue to have an impact for months…Continue
Added by Francesc Riverola on May 13, 2013 at 2:16pm — No Comments
Rabobank - "We have been arguing over the past month that while the yen should remain on a weakening trend that the upside potential of USD/JPY would be slowed if the market was paring back the size of its USD positions. This view seems to have been upheld in April though yesterday’s break of the psychologically important USD/JPY100 levels has injected fresh life into the currency pair. Over the coming weeks we continue to expect that the tone of the USD will be key in determining the pace…Continue
Added by Francesc Riverola on May 10, 2013 at 2:55pm — No Comments
Rabobank - "Insofar as the market has built up heavy USD long positions there is risk that the USD correction still has a long way to go. That said, clearly a lot of risk lies with the tone of US economic data. To date, it seems likely that the fiscal consolidation measures that have been announced in the US since the start of the year haven’t yet has an opportunity to show up in much of the official economic data. This also suggests that the USD’s pullback will have further to run.
Added by Francesc Riverola on May 1, 2013 at 10:16am — No Comments
Rabobank - "We have changed our ECB rates view: we are now forecasting a 25bp rate cut next week. This will take the refi rate to a historical low of 0.5%. Our previous call was for the benchmark refi rate to remain at 0.75% until mid-2014 at least. We do not expect the ECB to take the deposit rate below zero as this may have unintended side-effects and thus will remain in reserve for worse case scenarios, a view we explained in one of our previous research notes (“What are the odds of a…Continue
Added by Francesc Riverola on April 25, 2013 at 2:38pm — No Comments
Rabobank - "The weakness of growth in the Eurozone is likely to be highlighted by next week’s round of April PMI data. Insofar as this is set to stir speculation that the ECB could cut interest rates in the coming months, the EUR is likely to be on the back foot. That said, US data has recently disappointed. Yesterday’s releases of Philly Fed and leading indicators were plainly subdued. These follow weak March retail sales and payroll data releases earlier in the month. As a consequence of…Continue
Added by Francesc Riverola on April 19, 2013 at 11:11am — No Comments
Rabobank - "The yen remains a safe haven currency. The tendency for the yen to strengthen in times of uncertainty is linked with Japan’s current account surplus. This has at times looked a little shaky since Japan’s 2011 earthquake and nuclear disaster given the necessarily of importing expensive fossil fuels. However, the government is aiming to re-start nuclear power and it could be years before Japan truly has to face the loss of its current account surplus. The implication is that it…Continue
Added by Francesc Riverola on April 15, 2013 at 9:36am — No Comments