Currency investors should consider selling EUR/USD this week, advises Credit Suisse in its weekly FX pick to clients.
"The monetary policy divergence has re-emerged, in our view. We would stick to EUR shorts, following the ECB's dovish surprise at its last meeting as the threat of more negative front-end rates could be fairly effective in pushing funds out - for instance reserve managers should be sensitive to negative rates given the short duration of their fixed income holdings.
Meanwhile, the Fed has signalled December is on the table and data this week should broadly support this notion," CS says as a rationale behind this call.
"We expect unemployment to fall further to 5.0% (consensus is 5.1%), non-farm payrolls print to recover to 170k from 140k (consensus 180k) with positive backward revisions to the August and September prints (historically these two months tend to be revised up by 80k on average)," CS projects.
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