Societe Generale - EUR/USD is set to break through 1.33, as the ECB ignores unemployment

Societe Generale - "The ECB effectively declared a conditional victory in the fight against financial market turmoil yesterday and is likely to be on hold for a while. That, at any rate, is what we took from the press conference after the ‚unanimous‛ decision to leave rates on hold. This highlights the on-going difference between the ECB approach and that of the US Fed. The ECB does not see the revival of the Euro Zone economy and turning around the upward trend in unemployment, as its main goal. A stable currency and bond markets leave them to reflect on inflation risks which aren’t overwhelmingly pointing downwards.
As long as the ECB is focused on inflation and as long as market turmoil doesn’t return), and as long as the Fed is focused on economic recovery, we are likely to see upward pressure on the Euro, relative to the dollar, irrespective of the widening transatlantic growth gap. This is not only counter-intuitive, it is also dangerous for Europe, but in the short term, a break of EUR/USD above 1.33 would open the way for a spike to 1.35, and don’t be surprised to hear a lot of people talking about a move to 1.40 in the weeks ahead."

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Tags: ECB, EUR/USD, EURUSD, Societe Generale

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