• EUR/USD continues to trade sideways around the 1.38 level and it appears that range trading will remain the name of the game for a period of time. The next trigger event for a break out of the range is likely to come from a re-pricing of one of the two central banks.

  • Following a fairly strong recovery of US data over the past weeks, the FOMC meeting next week will probably not provide any new information and the Fed will likely continue its tapering path. While this admittedly brings us a small step closer to a rate hike in the US, it seems to be too early for markets to price in further hikes.

  • In respect of the ECB, the latest comments from various ECB members suggest that some ECB easing could be in the pipeline as the central bank seems to be concerned about deflation and the deflationary impact of the currency. However, given the current pricing in the European money market we probably have to see actual ECB easing in order for the curve to flatten further and the euro to weaken.

  • Today, the PMI releases will be in focus. We expect US Markit PMI to increase slightly, while our economists forecast euro-zone manufacturing PMI to decline slightly to 52.5 from 53.0, suggesting that risks might be skewed to the downside for EUR/USD today. Notably a decline in European PMIs indicating that sentiment has peaked for now could force the ECB to react soon.

  • The tensions in Ukraine continue and the US has said it plans to send 600 troops for exercise in eastern Europe to reassure allies on Russia’s border. The plans were announced after Ukraine accused pro-Russian separatists of torturing and killing two people and of shooting at one of its military planes. Renewed pressure on RUB may come back any moment on geopolitical woes and the risk of negative sentiment once again spreading to other EM markets should not be ignored.

  • In Australia consumer price inflation was weaker than expected in Q1 and the Australian dollar fell to a two-week low at 92.80 . Strong support for AUD/USD is seen at 92.54. This level might attract new buyers as it seems that the sentiment towards “China exposure” has improved slightly after the Markit/HSBC manufacturing PMI improved slightly to 48.3 in April.

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD clings to daily gains above 1.0650

EUR/USD clings to daily gains above 1.0650

EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.

EUR/USD News

GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.

GBP/USD News

Gold holds steady at around $2,380 following earlier spike

Gold holds steady at around $2,380 following earlier spike

Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.

Gold News

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in

Bitcoin price shows no signs of directional bias while it holds above  $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research. 

Read more

Week ahead – US GDP and BoJ decision on top of next week’s agenda

Week ahead – US GDP and BoJ decision on top of next week’s agenda

US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.

Read more

Majors

Cryptocurrencies

Signatures