25 Sep 2013
Flash: EUR/USD potential is for more downside - Societe Generale
FXstreet.com (Barcelona) - EUR/USD looks very expensive from a short term perspective, notes Sebastien Galy, Currency Strategist at Societe Generale.
Key Quotes
"Professional investors are long EUR as it drifts lower (retail is short)."
"Fed and ECB speakers have continued the repair work after the tapering fiasco, trying to pressure the front end of curves lower. Draghi is using the LTRO carrot having been beaten to it by the Fed."
"The outcome is to see EUR/USD fade very gently in line with the 2Y EUR/USD swap spread. The potential though is for more downside. Cyclical surprises would favor downside in EUR/USD."
"EU surprises have reached a plateau (Ifo up but below expectations today), while those in the US show some propensity for the topside. The fact that moves in the swap spread is actually ridiculously low, tells us how much of the FX market is driven by algorithms."
Key Quotes
"Professional investors are long EUR as it drifts lower (retail is short)."
"Fed and ECB speakers have continued the repair work after the tapering fiasco, trying to pressure the front end of curves lower. Draghi is using the LTRO carrot having been beaten to it by the Fed."
"The outcome is to see EUR/USD fade very gently in line with the 2Y EUR/USD swap spread. The potential though is for more downside. Cyclical surprises would favor downside in EUR/USD."
"EU surprises have reached a plateau (Ifo up but below expectations today), while those in the US show some propensity for the topside. The fact that moves in the swap spread is actually ridiculously low, tells us how much of the FX market is driven by algorithms."