19 Aug 2015
EUR/USD could re-visit 1.1100 – Societe Generale
FXStreet (Edinburgh) - Strategist at Societe Generale Kit Juckes has not ruled out another test of the 1.1100 handle in the near term.
Key Quotes
“With passage of the Greek debt deal legislation through Germany’s parliament looking secure today, that issue, for now at any rate, may be put to bed”.
“10-year Bund yields are at 64bp and would need to push a good bit lower to undermine the euro, which will be stuck in its narrow range against the dollar until the publication of the FOMC minutes”.
“If anything, there’s a bias to re-test/break EUR/USD 1.11, but really, something needs to change in EA/US rate differentials to move the pair meaningfully”.
“There’s more scope for a meaningful move (one way or the other) in the 2.19% 10-year Treasury yield than the 64bp Bund and likewise, the 2-year swap rate differential is made up of 95bp in the US and 9bp in Euros”.
“Past correlations would tell me that breaking the bottom of the current EUR/USD range, at 1.08, would be best achieved by the US 2-year rate jumping to around 1 1/4%. That’s both a huge move relative to the recent range, and a very small one in the context of the historical reaction to Fed tightening being imminent”.
Key Quotes
“With passage of the Greek debt deal legislation through Germany’s parliament looking secure today, that issue, for now at any rate, may be put to bed”.
“10-year Bund yields are at 64bp and would need to push a good bit lower to undermine the euro, which will be stuck in its narrow range against the dollar until the publication of the FOMC minutes”.
“If anything, there’s a bias to re-test/break EUR/USD 1.11, but really, something needs to change in EA/US rate differentials to move the pair meaningfully”.
“There’s more scope for a meaningful move (one way or the other) in the 2.19% 10-year Treasury yield than the 64bp Bund and likewise, the 2-year swap rate differential is made up of 95bp in the US and 9bp in Euros”.
“Past correlations would tell me that breaking the bottom of the current EUR/USD range, at 1.08, would be best achieved by the US 2-year rate jumping to around 1 1/4%. That’s both a huge move relative to the recent range, and a very small one in the context of the historical reaction to Fed tightening being imminent”.