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9 Aug 2013
Flash: EUR/USD momentum building for prolonged break past 1.3400 – Westpac
FXstreet.com (New York) - Risks are building for a bigger topside break through 1.34, despite firming tapering expectations, suggests Sean Callow, Global Markets Strategist at Westpac.
Key quotes
“Likely decent German GDP and ZEW data vs probable spotty updates on US retail sales and the first of the Aug business surveys (odds of a second consecutive monthly surge seem low) should see EUR bought into dips for the week.”
Note too that while tapering expectations have pushed bund-Tsy spreads out to 7-year wides, the EUR/USD is more typically driven by shorter-term spreads which continue to drift in EUR’s favor amid narrowing peripheral sovereign spreads and firmer German data.
“We remain EUR negative though on longer-term forecast horizons given the relatively more secure US growth picture and the ever present risk of political dysfunction in Greece, Italy, Spain and Portugal.”
Key quotes
“Likely decent German GDP and ZEW data vs probable spotty updates on US retail sales and the first of the Aug business surveys (odds of a second consecutive monthly surge seem low) should see EUR bought into dips for the week.”
Note too that while tapering expectations have pushed bund-Tsy spreads out to 7-year wides, the EUR/USD is more typically driven by shorter-term spreads which continue to drift in EUR’s favor amid narrowing peripheral sovereign spreads and firmer German data.
“We remain EUR negative though on longer-term forecast horizons given the relatively more secure US growth picture and the ever present risk of political dysfunction in Greece, Italy, Spain and Portugal.”