vendredi 10 avril 2015
Week Ahead: BoC, ECB, USD Position-Squaring, Sell EUR Rallies
Posted on 22:21 by nice news
The March Fed minutes proved to be more balanced than the statement. With an equal number of doves and hawks speaking next week, markets will try to decipher how the collective FOMC preference for the first hike has evolved of late.
It would take evidence that such timing is edging towards June as well as another pick-up in March CPI to help sustain the latest USD appreciation. Our central case remains for the Fed to hike in September.
Meanwhile, in Europe a more positive message from the ECB could be overwhelmed by Greek policymaker rhetoric – which is starting to fuel market anxiety about a possible 'Grexident'...Unless inflation starts to pick up more meaningfully we expect the ECB to stay strongly committed to the current pace of QE.
As a result we remain in favour of selling EUR rallies, for instance against the USD. However, given elevated short positioning, upside correction risk has been rising of late, especially as there seems to be limited scope for further diverging Fed– ECB monetary policy expectations in the short term.
In peripheral FX the focus will be on the BoC decision and associated inflation releases. While we expect rates to remain on hold, downward revisions to BoC's economic projections could keep the markets betting on further easing and more CAD downside.
After an aggressive period of Riksbank policy action, investors will be looking for any follow-through in core inflation similar to that already seen in headline numbers. If forthcoming, SEK should rise.
What we’re watching
EUR: ECB meeting – Although the ECB may turn more constructive on growth prospects, still-low inflation expectations should keep it in a position to maintain an aggressive monetary policy stance.
USD: US CPI – Given elevated USD long positioning, any weaker-thanexpected inflation data has scope to trigger material position-squaring-related
It would take evidence that such timing is edging towards June as well as another pick-up in March CPI to help sustain the latest USD appreciation. Our central case remains for the Fed to hike in September.
Meanwhile, in Europe a more positive message from the ECB could be overwhelmed by Greek policymaker rhetoric – which is starting to fuel market anxiety about a possible 'Grexident'...Unless inflation starts to pick up more meaningfully we expect the ECB to stay strongly committed to the current pace of QE.
As a result we remain in favour of selling EUR rallies, for instance against the USD. However, given elevated short positioning, upside correction risk has been rising of late, especially as there seems to be limited scope for further diverging Fed– ECB monetary policy expectations in the short term.
In peripheral FX the focus will be on the BoC decision and associated inflation releases. While we expect rates to remain on hold, downward revisions to BoC's economic projections could keep the markets betting on further easing and more CAD downside.
After an aggressive period of Riksbank policy action, investors will be looking for any follow-through in core inflation similar to that already seen in headline numbers. If forthcoming, SEK should rise.
What we’re watching
EUR: ECB meeting – Although the ECB may turn more constructive on growth prospects, still-low inflation expectations should keep it in a position to maintain an aggressive monetary policy stance.
USD: US CPI – Given elevated USD long positioning, any weaker-thanexpected inflation data has scope to trigger material position-squaring-related
Week Ahead: BoC, ECB, USD Position-Squaring, Sell EUR Rallies
Inscription à :
Publier les commentaires (Atom)
0 commentaires:
Enregistrer un commentaire