Forex Forecast

No Sympathy Those hoping for a clear show of sympathy from the Fed today were disappointed – no QE, no IOER cut, no discount window scheme, and not even a change in the “late 2014” guidance.

One Month Too Early? With two major policy decisions due over the next 36 hours, FX investors were cautious in expressing any directional conviction, though the dollar was slightly soft heading into today’s FOMC meeting.

Seeking FOMC Hints Risk was steady overnight heading into two crucial days’ worth of policy decisions. The official China PMI came in at 50.1 (cons. 50.3) overnight, barely an expansion but it appears markets were not overly concerned in light of signs the local economy is basing.

Not Yet All eyes are on the FOMC, though our view is that any further easing is far more likely at the September meeting, when we will see the new Summary of Economic Projections and a press conference by Chairman Bernanke.

EUR Attempts Rebound The EUR had a rather volatile overnight session, generally trending lower before a rather well-received EFSF auction prompted a rebound towards 1.23.

SNB Diversification Slows In figures released overnight, the SNB’s reserve allocation figures showed that as of the end of Q2, EUR holdings were 60%, up from 51% in Q1.

Walking The Walk? In the absence of any fresh incentives ahead of this week’s key events, EURUSD and the euro crosses remained heavy. Certainly, the euro bulls are still hoping for a bolder policy response from the ECB and/or more reassuring comments from Draghi on Thursday that would formally endorse the reactivation of the SMP, […]

SEK Pushes On The euro has drifted lower in the European session though conviction has been low, with a busy week ahead and pressure will be on for the ECB to actually deliver in the right setting.

Central Banks In Focus The euro has managed to hold its post-Draghi gains but the pressure will be on for the ECB to actually deliver in the right setting. This week sees the Fed, ECB and BoE all meeting on policy but there is no doubt as to which policy board is under the most […]

Talking The Talk Those looking for the US Q2 GDP report to cement the case for further Fed easing on August 1 were disappointed by the 1.5% headline real GDP growth print.

Confusion Reigns Following President Draghi’s comments yesterday, conviction is clearly lacking in the market, and further contradictory comments have failed to help investors seek any clarity.