The divergence between the two central banks and the easing expectations has been pressured the euro against the greenback. European bonds fell to record lows.
ABN Amro expects the ECB will cut the deposit rate in December by 20 basis points.
S & P: European Central Bank next month is expected to cut the deposit rate to -0.30%.
The Fed is expected to raise interest rates in December this year; and forecast 2016 will be implemented to raise interest rates four times, each time by 25 basis points.
We expect the US federal funds rate target at about 1.375%.
US dollar exchange rate is expected to hover at 1.05-1.07, this situation will continue until the end of 2017 euro.
Goldman’s Robin Brooks explaining the bind the ECB finds itself in currently, which it still thinks the EUR is heading to 0.95 by Q1 2016, and a whopping, and US multinationals crushing 0.80 by the end-2017.
The pair closed at the lowest level since March at 1.0590 levels. This week wraps with high impacts economic events like ECB economic policy meeting and NFP report.
|Monday||German retail sales and prelim CPI||Chicago PMI & Pending home sales|
|Tuesday||Manufacturing PMI, German and Euro area unemployment rate||ISM manufacturing PMI, final manufacturing PMI, FOMC member Evans and Brainard speaks|
|Wednesday||Spain unemployment rate,CPI& Core CPI flash estimate||FOMC member Lockhart speaks,ADP NFP data, Fed Chairman Yellen and Williams speaks, Revised NFP Q/Q,
|Thursday||Services PMI and ECB policy meeting||Unemployment claims, Yellen testifies about monetary policy before the Joint Economic Committee, in Washington DC, ISM non-manufacturing PMI and FOMC member Fischer speaks|
|Friday||German factory orders||NFP data and unemployment rate|
Traders eye ECB policy action and US NFP data. The December’s Fed’s action hinted this week’s NFP report.
Trading support finds at 1.0560, 1.0510 and 1.0470
Resistance seems at 1.0610, 1.0640 and 1.0690
Fresh selling available below 1.0560
The outlook remains bearish aiming at 1.0500 and 1.0450 levels.