Societe Generale Research discusses the US economic outlook and targets EUR/USD at 1.10 by year-end.

 

"It is possible, though by no means certain, that US fiscal policy will be tightened as the President and Congress struggle to reach agreement, and it is widely assumed that the AI industry will face greater Congressional scrutiny. However, those are issues for the future. The here and now tells a different story. Over the past two months, core CPI has risen by 0.3% month-on-month in each release, while headline CPI has increased by 1% over the same period. A large upside surprise in payroll growth is probably more noise than substance, but we have also seen stronger-than-expected retail sales and GDP data," SocGen notes.

 

"The bottom line is that there may be storm clouds gathering beyond the horizon, but for now the US economy continues to outperform most others. Our year-end EUR/USD target of 1.10 is not obsolete yet. The rise in bond yields, however, is feeding through to leveraged housing markets, and Australia is certainly one of them," SocGen adds.