vendredi 27 mars 2015
Stick To The Plan; Resell EUR/USD - BNPP
Posted on 01:36 by nice news
The USD has relatively retreated in the aftermath of the 18 March FOMC statement.
However, BNP Paribas believes the liquidation of USD positions so far has largely been confined to shorter-term market participants and momentum traders, while Longer-term oriented macro accounts are unlikely to have capitulated on their high conviction bullish USD views.
As such, BNPP advises its clients in its weekly note to 'stick to the plan' and keep reselling EUR/USD rebounds. Here is BNPP's rationale behind this call along with the details of its recent short EUR/USD position.
Eurozone investors are likely to remain sellers of the EUR on rallies
"Our positioning indicators suggest EURUSD positioning has not become stretched, and presumably positions have been reduced even further in this latest push higher. Moreover, we believe eurozone investors are likely to remain reliable sellers of the EUR," BNPP argues.
Market to reprice for tighter Fed policy again:
"We also see scope for the markets to reprice for a sooner Fed policy tightening...With most FOMC members still projecting two rate hikes before year-end, we think it will take a significant deterioration in labour market data or further weakness in inflation to prevent an earlier tightening. We suspect Fed speakers and data in the weeks ahead are likely to guide the markets back to pricing for a September lift-off," BNPP projects.
The trade: EUR/USD short:
In line with this view, BNPP maintains a short EUR/USD from early this week from 1.0990 with a target 1.04 and a stop at 1.1165.
However, BNP Paribas believes the liquidation of USD positions so far has largely been confined to shorter-term market participants and momentum traders, while Longer-term oriented macro accounts are unlikely to have capitulated on their high conviction bullish USD views.
As such, BNPP advises its clients in its weekly note to 'stick to the plan' and keep reselling EUR/USD rebounds. Here is BNPP's rationale behind this call along with the details of its recent short EUR/USD position.
Eurozone investors are likely to remain sellers of the EUR on rallies
"Our positioning indicators suggest EURUSD positioning has not become stretched, and presumably positions have been reduced even further in this latest push higher. Moreover, we believe eurozone investors are likely to remain reliable sellers of the EUR," BNPP argues.
Market to reprice for tighter Fed policy again:
"We also see scope for the markets to reprice for a sooner Fed policy tightening...With most FOMC members still projecting two rate hikes before year-end, we think it will take a significant deterioration in labour market data or further weakness in inflation to prevent an earlier tightening. We suspect Fed speakers and data in the weeks ahead are likely to guide the markets back to pricing for a September lift-off," BNPP projects.
The trade: EUR/USD short:
In line with this view, BNPP maintains a short EUR/USD from early this week from 1.0990 with a target 1.04 and a stop at 1.1165.
Stick To The Plan; Resell EUR/USD - BNPP
Categories: Stick To The Plan; Resell EUR/USD - BNPP
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