EUR gets a leg up from EUR/GBP rebound – Scotiabank
|The usual leaks that follow ECB rate decisions emerged yesterday to suggest that policymakers are leaning towards 25bps cuts in January and March at this point. Markets have priced in a bit more easing risk; swaps reflect 69bps of anticipated easing through March, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
EUR is trading soft
“ECB Governor Villeroy—a dove—went further, stating that lower rates were coming and that policymakers were comfortable with market pricing (of more than 100bps of easing anticipated for the year). The Bundesbank’s latest forecast anticipates virtually no growth (0.2%) in Germany next year. Despite a mild rebound from the intraday low, with the help of short-covering on the crosses, the outlook for the EUR looks pretty bleak.”
“Intraday gains are providing some, potentially bullish, respite for the EUR, with an outside range higher developing around the intraday low. Gains may prove to be short-lived and minor bear trend channel resistance at 1.0505 is yet to be tested. A push above here is needed to drive a little more strength in the short run.”
“Broader technical trends are EUR-bearish though and a net loss on the week for the EUR remains likely—which would heap technical misery on the EUR after last week’s failure to hold above 1.06. I doubt any pickup in the EUR will extend much beyond the mid-1.05s.”
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