dimanche 19 avril 2015
USD, EUR, CHF, GBP, AUD: Outlooks For The Coming Week - Morgan Stanley
Posted on 00:22 by nice news
USD: Medium Term Bulls. Still Bullish.
US data weakness has continued, driving a USD correction over the past week. A more data dependent Fed could inject volatility into the USD, and a slower pace of hikes may lead to a slower pace of USD appreciation. However, we still expect USD to continue to be the strongest G10 currency. Growth differentials between the US and RoW remain supportive to the US. The ECB made clear that it will continue QE, weighing on EUR, and de facto supporting USD.
EUR: Monetary and Political Pressures. Bearish.
The latest ECB meeting sent a strong message that it intends to do QE through the third quarter of 2016. Monetary accommodation and low interest rates in the Euro Area have made EUR more attractive as a funding currency, evidenced by increased European bank lending abroad. This should add pressure to EUR. In addition, political tension in Greece continues to escalate, and could add a risk premium to the currency, in our view.
JPY: Strong on the Crosses. Bullish.
We expect JPY to remain strong on the crosses. Flow data indicates that Japanese investors increased overseas holdings, becoming the largest holder of USTs outside the US, but at the same time, overseas investors poured into Japanese markets. This highlights the risk that USDJPY remains rangebound in the near term. However, with monetary easing from the ECB ongoing, we expect EURJPY to head lower.
GBP: Lowflation and Political Risks. Bearish.
The recent support for GBPUSD comes as implied volatility has reduced. We would use this rebound as a selling opportunity as there are still downside risks from political uncertainty and low inflation. This week’s CPI print showed that while the UK has not dipped into deflation, there are still downside risks and this is likely to bring about varying views among the BoE’s MPC, which may even surface in this weeks’ BoE Minutes. We also like the risk-reward of selling
US data weakness has continued, driving a USD correction over the past week. A more data dependent Fed could inject volatility into the USD, and a slower pace of hikes may lead to a slower pace of USD appreciation. However, we still expect USD to continue to be the strongest G10 currency. Growth differentials between the US and RoW remain supportive to the US. The ECB made clear that it will continue QE, weighing on EUR, and de facto supporting USD.
EUR: Monetary and Political Pressures. Bearish.
The latest ECB meeting sent a strong message that it intends to do QE through the third quarter of 2016. Monetary accommodation and low interest rates in the Euro Area have made EUR more attractive as a funding currency, evidenced by increased European bank lending abroad. This should add pressure to EUR. In addition, political tension in Greece continues to escalate, and could add a risk premium to the currency, in our view.
JPY: Strong on the Crosses. Bullish.
We expect JPY to remain strong on the crosses. Flow data indicates that Japanese investors increased overseas holdings, becoming the largest holder of USTs outside the US, but at the same time, overseas investors poured into Japanese markets. This highlights the risk that USDJPY remains rangebound in the near term. However, with monetary easing from the ECB ongoing, we expect EURJPY to head lower.
GBP: Lowflation and Political Risks. Bearish.
The recent support for GBPUSD comes as implied volatility has reduced. We would use this rebound as a selling opportunity as there are still downside risks from political uncertainty and low inflation. This week’s CPI print showed that while the UK has not dipped into deflation, there are still downside risks and this is likely to bring about varying views among the BoE’s MPC, which may even surface in this weeks’ BoE Minutes. We also like the risk-reward of selling
USD, EUR, CHF, GBP, AUD: Outlooks For The Coming Week - Morgan Stanley
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