8 Jun 2015
EUR/USD: conditions set to re-test March lows – SG
FXStreet (Barcelona) - Kit Juckes of Societe Generale, comments on the CFTC positioning for majors, the US retail sales data ahead and further mentions that the Greece and yields related headlines suggest the single currency will resume a move to re-test March lows.
Key Quotes
“CFTC positioning data show an increased dollar long but the driver is not Euro positioning. Yen shorts (growing fast) are now nearly as big as Euro ones, which have been cut further. Sterling shorts remain relatively modest.”
“The conditions in place (Bunds and Greek news flow notwithstanding) for EUR/USD to re-test March lows. The Euro/US 2yr differential is 3bp from the wides we saw in March, although the 10-year Bund-Treasury yield differential is a lot narrower than it was then.”
“The key driver of the next leg in the dollar rally may be the US retail sales data on Thursday. Retail sales have been lagging income growth but with the PCE deflator at 0.1% and wages growing at 2.3%, Americans have the wherewithal to drive stronger spending.”
Key Quotes
“CFTC positioning data show an increased dollar long but the driver is not Euro positioning. Yen shorts (growing fast) are now nearly as big as Euro ones, which have been cut further. Sterling shorts remain relatively modest.”
“The conditions in place (Bunds and Greek news flow notwithstanding) for EUR/USD to re-test March lows. The Euro/US 2yr differential is 3bp from the wides we saw in March, although the 10-year Bund-Treasury yield differential is a lot narrower than it was then.”
“The key driver of the next leg in the dollar rally may be the US retail sales data on Thursday. Retail sales have been lagging income growth but with the PCE deflator at 0.1% and wages growing at 2.3%, Americans have the wherewithal to drive stronger spending.”