FXstreet.com (San Francisco) - Rabobank said in a recent article that there is “weak currency factors on both sides of the Atlantic” and despite they aren't "contesting the USD's safe haven value", the US "fundamentals are weak" and these economic data "is likely to prevent a free-fall" in the EUR/USD. Rabobank expects "EUR/USD to remain close to the 1.2200 level on a 3 mth view pushing higher towards USD1.25 in 6 mths."
On the other said, Commerzbank comments in a article published the end of the week that their "analysis concludes that it will be impossible to deny the attractiveness of the US dollar." But the Yen, as sample, "could cease to be regarded as a safe haven in the long run." Its EUR/USD outlook is clear: "The forces which are driving EUR-USD, i.e. QE3 on the one hand and debt crisis on the other hand, are likely to continue to be well balanced."
Commerzbank also comments on the economic data topic: "Unless we see a fundamental re-valuation, EUR-USD will thus remain in a state of flux. In our view the risks are concentrated on the downside though."
In the same line of Rabobank. The Dutch bank believes that in the middle term the "weakness on both sides of the Atlantic is likely to pan out into more choppy range trading for EUR/USD." On a 12 month view, Rabobank "anticipates that EUR/USD can climb back towards 1.35, though this assumes the Eurozone politicians can continue to edge towards a solution for the crisis."
Friday's session was a quiet session with the EUR/USD closing with a testimonial 0.02% gain at 1.2286. In the week, the Euro lost around 100 pips from Monday's opening at 1.2387 to the mentioned 1.2286 after four negative days in row. But it wasn't too big movements if we see the previous weeks volatile conditions. UBS commented that market is in "calm Before Storms," and the bank states in a Geoffrey Yu and Manik Narain report that "markets remain calm for now but anxiety will rise as risk events build towards the end of August."
Next week will be busy of economic data across the world. Retail sales in US, GDP in Germany and the whole Eurozone, employment report in UK, monetary reports in Japan and inflation in UK and US. But despite the "news on the periphery should remain the primary driver for FX market in the coming week," points UBS analysts, "there are growth hurdles globally to overcome too."
Specially when, as Bank of America Merril Lynch wrote in a report, that "medium-term growth in retail sales is likely to remain weaker than before the financial crisis." According to BoA, now the consumer is more focused "to save and pay down debt than to spend, and are spending a greater proportion of income on services and increased costs of living." So, they expect a weak 0.2% rise in Retail sales in July, and it is sample of market will focus during the next week.
Said that, "Global markets have taken a breather during this week after a volatile environment during the previous week when ‘help-is-on the-way’ commentaries by European officials did not come to fruition,” Wells Fargo observes in a research note.
Wells Fargo suggests that the lack of data coming out of the Eurozone during this week may have had something to do with how “calm” markets have been, and says that “this is likely going to change in the coming week when Euro zone GDP for the second quarter, as well as industrial production numbers for June, are released.”
As a short term outlook for the EUR/USD, Danske Bank says that the pair could see more downside. According to M.Helt, Senior Analyst at Danske Bank, “we see a risk that EUR/USD could continue to decline until we see further signs of policy responses from either ECB, Fed or China. It has now been one week since Draghi told the markets that the ECB is ready for open market operations at the front end of the curve if assistance is requested”.
Finally, in a CFTC Commitment of Traders Report for the week Ending August 7, TD Securities says that "Net short EUR positioning was trimmed again in the latest week, falling to a net total of 131.7k contracts, down from 138.9k contracts in the July 31st week."
TD points that "this is the smallest net short EUR spec position since the start of May, just before EUR/USD started its rapid descent from the USD1.32 (spot) area." Despite that, "Net EUR shorts still represent the biggest aggregate exposure in this market in USD terms (USD20.4bn equivalent, we calculate)," concluded TDS.
On the other said, Commerzbank comments in a article published the end of the week that their "analysis concludes that it will be impossible to deny the attractiveness of the US dollar." But the Yen, as sample, "could cease to be regarded as a safe haven in the long run." Its EUR/USD outlook is clear: "The forces which are driving EUR-USD, i.e. QE3 on the one hand and debt crisis on the other hand, are likely to continue to be well balanced."
Commerzbank also comments on the economic data topic: "Unless we see a fundamental re-valuation, EUR-USD will thus remain in a state of flux. In our view the risks are concentrated on the downside though."
In the same line of Rabobank. The Dutch bank believes that in the middle term the "weakness on both sides of the Atlantic is likely to pan out into more choppy range trading for EUR/USD." On a 12 month view, Rabobank "anticipates that EUR/USD can climb back towards 1.35, though this assumes the Eurozone politicians can continue to edge towards a solution for the crisis."
Friday's session was a quiet session with the EUR/USD closing with a testimonial 0.02% gain at 1.2286. In the week, the Euro lost around 100 pips from Monday's opening at 1.2387 to the mentioned 1.2286 after four negative days in row. But it wasn't too big movements if we see the previous weeks volatile conditions. UBS commented that market is in "calm Before Storms," and the bank states in a Geoffrey Yu and Manik Narain report that "markets remain calm for now but anxiety will rise as risk events build towards the end of August."
Next week will be busy of economic data across the world. Retail sales in US, GDP in Germany and the whole Eurozone, employment report in UK, monetary reports in Japan and inflation in UK and US. But despite the "news on the periphery should remain the primary driver for FX market in the coming week," points UBS analysts, "there are growth hurdles globally to overcome too."
Specially when, as Bank of America Merril Lynch wrote in a report, that "medium-term growth in retail sales is likely to remain weaker than before the financial crisis." According to BoA, now the consumer is more focused "to save and pay down debt than to spend, and are spending a greater proportion of income on services and increased costs of living." So, they expect a weak 0.2% rise in Retail sales in July, and it is sample of market will focus during the next week.
Said that, "Global markets have taken a breather during this week after a volatile environment during the previous week when ‘help-is-on the-way’ commentaries by European officials did not come to fruition,” Wells Fargo observes in a research note.
Wells Fargo suggests that the lack of data coming out of the Eurozone during this week may have had something to do with how “calm” markets have been, and says that “this is likely going to change in the coming week when Euro zone GDP for the second quarter, as well as industrial production numbers for June, are released.”
As a short term outlook for the EUR/USD, Danske Bank says that the pair could see more downside. According to M.Helt, Senior Analyst at Danske Bank, “we see a risk that EUR/USD could continue to decline until we see further signs of policy responses from either ECB, Fed or China. It has now been one week since Draghi told the markets that the ECB is ready for open market operations at the front end of the curve if assistance is requested”.
Finally, in a CFTC Commitment of Traders Report for the week Ending August 7, TD Securities says that "Net short EUR positioning was trimmed again in the latest week, falling to a net total of 131.7k contracts, down from 138.9k contracts in the July 31st week."
TD points that "this is the smallest net short EUR spec position since the start of May, just before EUR/USD started its rapid descent from the USD1.32 (spot) area." Despite that, "Net EUR shorts still represent the biggest aggregate exposure in this market in USD terms (USD20.4bn equivalent, we calculate)," concluded TDS.
