EUR/USD: Fed rate hike expectations prevail again

KBC Market Research Desk KBC Bank

Currencies

EUR/USD

During summer, EUR/USD held a tight sideways range as the relative policy shifts between the Fed and ECB were limited. Currently, Fed rate hike expectations prevail again, pushing EUR/USD lower in the range.

EUR/GBP

Sterling was hammered immediately after the Brexit vote. The UK economy withstood the first Brexit shock well, but the prospect of further BoE easing and uncertainty on a "hard Brexit" keep sterling in the defensive.

USD/JPY

The yen didn't weaken after the September BOJ policy meeting. However, USD/JPY finally gained ground on overall USD strength as US bond yields trended higher. A break above first resistance at 104.32 didn't occur.

EUR/NOK

The Norwegian Krone strengthened as higher inflation reduced the chances for further policy easing. Rising oil prices helped the pair return to the EUR/NOK 9.00.barrier.

EUR/PLN

The zloty rebounded as market fears on the appointment of new NBP members by the government eased. The fundamentals are modestly PLN supportive. The zloty probably won't lose any further interest rate support anymore.

EUR/HUF

The forint was already better bid earlier this year as the MNB easing cycle halted. The currency was additionally supported by improving economic fundamentals. This improvement was illustrated by a credit rating upgrade.

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KBC Market Research Desk

KBC Bank

KBC's Market Research Desk publishes a number of short-term reports.

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