Bob Lynch, senior currency strategist at HSBC:

  • “If Yellen is dovish, it would materially counter some of the elements that came out of the minutes” (referring to FOMC minutes of the July meeting)
  • the ECB has been “pretty transparent about what they are doing” … ECB has made clear that it wants to see the full effects of the June easing and the new TLTROs or see new signs of deflation before embarking on additional easing measure
  • View that the euro will decline further in the months ahead and have a $1.2800 forecast for year-end
  • Based on the notion that the U.S. economy will keep improving and the eurozone economy will either sputter or stall further … “The conditions in each economic area suggest that the dollar’s yield premium should hold up pretty well”

George Davis, chief FIC technical analyst at RBC Capital Markets.

  • Interest rate differentials between 10-year U.S Treasuries and 10-year German Bunds … “widening momentum has increased for the Treasury-Bund spread after prices took out a double top from 2005-2006 at 119 basis points”
  • Resistance in the 145 to 154 basis point area will serve as the next topside target “ahead of the 1999 secular high at 169 basis points”
  • “The ascending channel pattern in place suggests that pullbacks to support at 123 and 112 basis points will attract renewed widening interest”
  • Said the euro’s failure in May, when it topped out at $1.3993, to break above a key long-term resistance trendline, already hinted at a double top pattern. “This was amplified by the weekly studies, which traced out a bearish divergence from overbought levels”
  • The subsequent euro slide below key trendline support at $1.3559 and more recently the November 2013 lows near $1.3296, now expose the 38.2% Fibonacci retracement of the 2012-2014 upmove, which comes in at $1.3232
  • If that level gives way, “additional support is located at $1.3105 and $1.3005 (50% retracement) with these levels serving as intermediate targets for the trend reversal”
  • “Note that a double bottom from 2013 is flush with the 61.8% retracement at $1.2778, and this level cannot be ruled out as a longer-term target”

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics:

  • (Europe) The real story lies in “the ongoing relative weakness in the industrial sector, with the manufacturing sector PMI sliding to 50.8 in August from 51.8 in July”
  • … largely driven “by the slump in France, but manufacturing is “also relatively weak in Germany indicating a wide divergence between these two industries in Europe”

Via MNI (more detail at that link)

ps: Here is the Jackson Hole schedule … hot off the press!