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6 Jun 2014
USD may struggle to gain further momentum - Bank of Tokyo Mitsubishi UFJ
FXStreet (Bali) - FX Strategists at the Bank of Tokyo Mitsubishi UFJ share their thoughts on the EUR/USD, noting that risks are starting to shift to the upside, barring a major positive surprise in the US NFP.
Key Quotes
"The euro weakened initially against the US dollar following today’s ECB monetary policy meeting hitting an intra-day low just above the 1.3500-level, but has since almost fully recovered lost ground. The lack of negative euro reaction is likely mainly a reflection that the ECB had done such a good job of signalling in advance the easing measures announced at today’s meeting. We believe that the ECB met and may even have slightly exceeded investors’ high expectations of monetary easing."
"The combination of lowering interest rates, adding liquidity, strengthening forward guidance, and credit easing through targeted LTROs are likely to weigh modestly on the euro. However, their negative impact on the euro was likely already almost fully priced ahead of today’s meeting. The ECB’s signal that they are moving closer to purchases of private assets may also help to weigh on the euro in the near-term although the potential timing and scale of purchases remains unclear."
"The US dollar may struggle to gain further upward momentum in the near-term without a stronger than expected non-farm payrolls report for May. The weaker than expected ADP survey has reduced the likelihood of a US dollar positive payrolls report on Friday."
Key Quotes
"The euro weakened initially against the US dollar following today’s ECB monetary policy meeting hitting an intra-day low just above the 1.3500-level, but has since almost fully recovered lost ground. The lack of negative euro reaction is likely mainly a reflection that the ECB had done such a good job of signalling in advance the easing measures announced at today’s meeting. We believe that the ECB met and may even have slightly exceeded investors’ high expectations of monetary easing."
"The combination of lowering interest rates, adding liquidity, strengthening forward guidance, and credit easing through targeted LTROs are likely to weigh modestly on the euro. However, their negative impact on the euro was likely already almost fully priced ahead of today’s meeting. The ECB’s signal that they are moving closer to purchases of private assets may also help to weigh on the euro in the near-term although the potential timing and scale of purchases remains unclear."
"The US dollar may struggle to gain further upward momentum in the near-term without a stronger than expected non-farm payrolls report for May. The weaker than expected ADP survey has reduced the likelihood of a US dollar positive payrolls report on Friday."