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Nov 11 - 09:55 AM

USD: Confident We've Seen The Lows In GBP/USD But Not 100% Sure We've Seen The Lows In EUR/USD - SocGen

By eFXdata  —  Nov 11 - 09:24 AM
Societe Generale Research discusses the ongoing USD turn. 
 
"US inflation (at 7.7% in October) fell to its lowest level since January, and the core measure (6.3%) looks as if it has peaked. However, the driver of the fall in core CPI was core goods inflation falling to 5.1%, from a peak of 12.3% in February. Core services inflation was steady at 6.7%. That’s where the effects of a tight labour market and strong household cash balances are felt and this, if nothing else, will ensure that the message from forthcoming Fed speakers doesn’t get much softer," SocGen notes. 

"In Europe, we’re confident that we have seen the low in GBP/USD, but not 100% sure we’ve seen the low in EUR/USD. After all, the Russian elephant is still loitering in the corner of the room. EUR/USD has broken out of its downtrend, but there will be a few more twists and turns before a clear uptrend towards 1.12 emerges. Where we are more confident is in Asia/Pacific; the yen has continued to track 10year Treasury yields and if they have peaked, so has USD/JPY. The positive mood from Chinese equities can rub off on the yen, and on the AUD. The RBA remains extremely frustrating, but if markets downgrade Fed expectations, then at least that narrows the Fed/RBA gap," SocGen adds. 

Source:
Société Générale Research/Market Commentary

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