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3 Sep 2015
EUR: Event risk building ahead of key data for the single currency - TDS
FXStreet (Delhi) – Ned Rumpeltin, European Head of Currency Strategy at TDS, notes that the event risk is building up for the single currency ahead of the ECB meeting. Although, the US trade and jobless claims data is unlikely to provide much of a sustained impulse ahead of tomorrow’s employment data while the impact from the ISM services PMI should be felt only at the margin.
Key Quotes
“Alongside today’s rate decision is the ECB’s quarterly Staff Macroeconomic Projections, which may attract a relatively high degree of attention from markets. Recent commodity price declines, coupled with a likely-delayed rate hike by the Fed that should be supportive for the EUR through the end of this year, suggest downside risks to the inflation forecast. But we think that September is too soon to see major downward revisions.”
“Moving towards the end of the year, however, there is likely to be ample risk for the ECB to loosen its policy stance via more aggressive QE.
“We are generally biased in favor of a dovish outcome today but acknowledge this is probably a widely held view. That suggests considerable two-way risks for the EUR that will depend highly on the exact mixture of forecast changes, overall tone, and introduction of any new measures.”
“Key levels to watch on the topside are 1.1332 (1 September high) and 1.1369 (the 38.2% Fibo retracement level of the 24-28 August decline). Looking lower, we will be watching 1.1155 (28 August low) as well as weaker support at 1.1107 and 1.1075 ahead of the crucial 1.1820 region.”
Key Quotes
“Alongside today’s rate decision is the ECB’s quarterly Staff Macroeconomic Projections, which may attract a relatively high degree of attention from markets. Recent commodity price declines, coupled with a likely-delayed rate hike by the Fed that should be supportive for the EUR through the end of this year, suggest downside risks to the inflation forecast. But we think that September is too soon to see major downward revisions.”
“Moving towards the end of the year, however, there is likely to be ample risk for the ECB to loosen its policy stance via more aggressive QE.
“We are generally biased in favor of a dovish outcome today but acknowledge this is probably a widely held view. That suggests considerable two-way risks for the EUR that will depend highly on the exact mixture of forecast changes, overall tone, and introduction of any new measures.”
“Key levels to watch on the topside are 1.1332 (1 September high) and 1.1369 (the 38.2% Fibo retracement level of the 24-28 August decline). Looking lower, we will be watching 1.1155 (28 August low) as well as weaker support at 1.1107 and 1.1075 ahead of the crucial 1.1820 region.”