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3 Jun 2014
EUR/USD between Draghi and US Payrolls – Rabobank
FXStreet (Edinburgh) - This week would be critical for the EUR/USD with spot facing the ECB gathering on Thursday and the US Non farm Payrolls on Friday, commented Jane Foley, Senior Currency Strategist at Rabobank.
Key Quotes
“The week is clearly being overshadowed by the forthcoming ECB policy meeting and the related discussion as to which policy measures Draghi will evoke”.
“Not only does the ECB have a desire the increase the policy support to SMEs within the region but the disinflationary environment has stoked a clear preference for a softer currency. Since his warnings last month that policy action is likely in June, the EUR has dropped 1.7% vs. the USD”.
“The test for Draghi this week will be to avoid disappointing the market which could result in a ‘buy on the rumour, sell on the fact’ reaction in the EUR”.
“This task is all the more complicated given that Friday brings the US nonfarm payrolls release. A strong set of US labour data will play into Draghi’s hands but, by contrast, a weak report on Friday could diminish any further successes that the ECB may have in keeping a lid on EUR/USD”.
“We see risk that EUR/USD may only edge down as far as the 1.35 level this year. Our 12 mth forecast stands at EUR/USD 1.30”.
Key Quotes
“The week is clearly being overshadowed by the forthcoming ECB policy meeting and the related discussion as to which policy measures Draghi will evoke”.
“Not only does the ECB have a desire the increase the policy support to SMEs within the region but the disinflationary environment has stoked a clear preference for a softer currency. Since his warnings last month that policy action is likely in June, the EUR has dropped 1.7% vs. the USD”.
“The test for Draghi this week will be to avoid disappointing the market which could result in a ‘buy on the rumour, sell on the fact’ reaction in the EUR”.
“This task is all the more complicated given that Friday brings the US nonfarm payrolls release. A strong set of US labour data will play into Draghi’s hands but, by contrast, a weak report on Friday could diminish any further successes that the ECB may have in keeping a lid on EUR/USD”.
“We see risk that EUR/USD may only edge down as far as the 1.35 level this year. Our 12 mth forecast stands at EUR/USD 1.30”.