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Nov 07 - 06:55 PM

EUR/USD: Filtering The Signal From The Noise - Danske

By eFXdata  —  Nov 07 - 03:00 PM

Danske Research discusses EUR/USD outlook and maintains a structural bearish bias.

"EUR/USD rallied on Friday, from the 0.97's towards the 0.99's. This seemed to be driven by US payrolls that showed an increased in US unemployment rate and thus implicitly, that Fed might be closer to its end goal(s). Equally, speculation that China is ending its zero covid policy fuelled CNH, EUR and others. In our view, CPI continues to run hot and over the weekend, we also see less optimism towards a turn in the Chinese business cycle," Danske notes. 

"Although events like this can move EUR/USD around quite a bit over a time horizon that is a few weeks, we would rather look towards signs that capex is picking up pace if we are to see a sustained uptick in spot. At present, signs of capex remain quite weak and price pressures are strong.

Further, EUR/USD spot is highly affected by terms-of-trade that is quite related to the level of energy prices and not the growth in CPI as such. We continue to forecast 0.93 in 12m," Danske adds. 

Source:
Danske Research/Market Commentary

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