From ABN Amro today .... in brief:
- We have kept in place our long US dollar views versus the euro, the yen, the Australian dollar and the New Zealand dollar
- We expect that the US economy will strengthen in the months ahead
- This will also trigger a Fed rate hike in September in our view
- We expect two rate hikes this year
The resilience of EUR/USD during the escalation of the Greek saga has surprised many. This was mainly because modest risk aversion weighed on the USD dollar. The unwinding of overcrowded short futures positions in the EUR is also another important contributing factor. Since investor sentiment has improved, the US dollar has gained across the board including versus the euro. Going forward, we expect EUR/USD to test parity in the coming months mainly because of the monetary policy divergence between the US and eurozone. The US dollar is currently driven by cyclical forces, such as the relative economic performance and the outlook for the Fed
