For superb motive the market is preoccupied by the potential coverage choices of the Federal Reserve, Rabobank’s Senior FX Strategist Jane Foley notes.
Threat of EUR/USD dips again to 1.10
“In July, market expectations relating to a doable September price minimize from the Fed started to agency up. Consequently, for the reason that begin of that month the USD has underperformed all different G10 currencies. There are nation particular elements which have impacted a few of the different G10 currencies on this interval and lent them assist vs. the USD. The BoJ hiked charges in late July and has maintained a hawkish bias since then.”
“Within the UK, the change of presidency has to date lent assist to investor sentiment, whereas in Australia the RBA has signalled that it retains a hawkish bias. For a number of of the G10 currencies, nonetheless, it’s harder to attribute a optimistic change of their fundamentals over the summer time. The BoC introduced back-to-back price cuts in June and July and minimize for a 3rd time in September and the Riksbank and the RBNZ minimize charges in August.”
“The ECB introduced the second price minimize of the cycle earlier this week and one other transfer is broadly anticipated earlier than the top of the 12 months. Newest ECB workers projections additionally embrace a downward revision to Eurozone progress. In our view whereas expectations of Fed easing will hold the USD on the again foot, lower than beneficial Eurozone fundamentals are more likely to cap upside potential for EUR/USD going ahead. We proceed to see threat of dips again to EUR/USD1.10.”
