Societe Generale’s ‘FX Daily’ strategy note from Monday looks at the euro, the yen and GBP.
On EUR/USD SG say (bolding mine):
“With a Refi Rate cut now likely at next month’s ECB meeting, it’s worth winding the clock back to the last cut, from 0.5% to 0.25% in early November. EUR/USD fell from 1.38 to 1.25 in the 2 weeks before that cut, fell below 1.34 on the news, but was back at 1.38 by mid-December. That may be a decent blueprint for the next few weeks“
Ah, yeah …
This is what Ryan said, 5 days ago … Some perspective for those expecting a rate cut next month
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OK, moving on …
On the yen and yesterday’s current account deficit data, SG say they are looking for
“solid US data this week (NFIB small business confidence and retail sales tomorrow, Empire manufacturing, Philly Fed and industrial production on Thursday inter alia), all of which should help keep 10-year yields above 2.6%, while simultaneously maintaining the uptrend in equity indices, EM assets, and hopefully USD/JPY.”
Further comments in the note:
- UK labour market data and the BOE Inflation report are likely to be sterling-friendly
- Still hoping to sell AUD/USD close to 0.95.
- New Zealand housing data are softening (AUD/NZD rallying)
- Last week’s NorgesBank hawkishness is still reflected in NOK/SEK trending higher.
