30 Jan 2015
EUR/USD: Potential consolidation in store - SocGen
FXStreet (Bali) - The FX Strategy Team at Societe Generale anticipates a potential consolidation in EUR/USD, a bounce in non resource-sensitive EM currencies, but bearish CAD, NZD and AUD.
Key Quotes
"Through 2013 and 2014, the main driver of US dollar strength was the gradual ratcheting up of expectations about a turn in the Fed’s monetary policy cycle. Real yields moved steadily higher and the dollar rose in tandem."
"Since late last year however, US real yields have fallen back – hence a bounce in the price of gold. The main FX drivers now are anticipation of further easing (in New Zealand, Australia, and Canada in particular), and uncertainty about how much further commodity prices might fall."
"That may bring us a consolidation in EUR/USD, a bounce in non resource-sensitive EM currencies, but it still leaves us bearish of CAD, NZD and AUD."
Key Quotes
"Through 2013 and 2014, the main driver of US dollar strength was the gradual ratcheting up of expectations about a turn in the Fed’s monetary policy cycle. Real yields moved steadily higher and the dollar rose in tandem."
"Since late last year however, US real yields have fallen back – hence a bounce in the price of gold. The main FX drivers now are anticipation of further easing (in New Zealand, Australia, and Canada in particular), and uncertainty about how much further commodity prices might fall."
"That may bring us a consolidation in EUR/USD, a bounce in non resource-sensitive EM currencies, but it still leaves us bearish of CAD, NZD and AUD."