Euro: Bearish Dollar consensus limits downside – Societe Generale
Kit Juckes at Societe Generale highlights that EUR/USD has lost downward momentum after slipping from 1.18 to 1.16, despite risk-off conditions and tumbling sentiment indicators. He links this resilience to a bearish Dollar consensus and to markets still pricing multiple ECB hikes, suggesting rate expectations must shift before EUR/USD trends decisively.
Euro holds despite risk-off backdrop
"Rates and equity markets are in ‘risk-off’ mode, the SG Sentiment Indicator is tumbling and yet, EUR/USD, having slipped from 1.18 to 1.16, has run out of downward momentum!"
"To some extent, this reflects the bearish USD consensus (President Trump wants a weaker dollar and lower rates and isn’t doing anything to make foreign investors relaxed about holding long dollar positions), and to some extent it reflects the fact that while the front end of the US rates curve is now pricing in a decent chance of a Fed hike this year (in which regard, Wednesday’s FOMC Minutes will be interesting) it is still pricing in 3 ECB hikes (and 2 ½ from the bank of England)."
"This still suggests that we need the rates market to move before FX can: If European rate hike expectations are questioned by the market (they look excessive given the economic outlook) the dollar is likely to get a lift (as it would if the FOMC minutes trigger a further rethink of the likely Fed rate path), but even so, any upward trend in the dollar is likely to be slowed by the underlying negative sentiment."
"Currently, the futures market is busy, once again, giving up on long USD positions."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
TSMC’s $2 Billion Silicon Interposer Order Given to GlobalFoundries, Key CoWoS Components to be Produced in the U.S. for the First Time
This move marks the official extension of a key link in the AI packaging supply chain to the United States. Analysis indicates that the five-year long-term contract reflects TSMC's strong long-term outlook for silicon interposer demand. Meanwhile, Taiwanese companies UMC and PSMC are actively expanding capacity to compete for orders, but this major order has been secured by GlobalFoundries, meaning that American production capacity will become a new factor in the silicon interposer market landscape over the next five years.
Gasoline Prices Rise in Tandem with Election Poll Trends! Goldman Sachs: With 26 Days Left Until the Midterm Election, Probability of a Democratic Sweep Rises to 65%
Goldman Sachs states that the probability of a Democratic sweep has risen to 65%, but polls in red states have historically overestimated their advantage; the rise and fall of oil prices is the decisive variable.
Goldman Sachs continues to be bullish on PJM exposure IPP: Preferred Talen Energy (TLN.US), NRG Energy (NRG.US), and Vistra (VST.US)
FERC has essentially rejected the PJM electricity proposal. Goldman Sachs states that regulatory risks have been disproven and is optimistic about three buy-rated targets: Talen Energy, Vistra, and NRG Energy. The capacity auction price for December is expected to approach the upper clearing limit.
Crypto prices
More
