September US payrolls data have not hugely altered expectations around Fed tapering policy though the weight of long USD positions suggests scope for some corrective activity in the weeks ahead. That said, economists at Rabobank see the factors that have driven recent USD gains as essentially remaining in place and have brought forward their 12-month EUR/USD 1.15 target to a three-month view.
Ripe for a correction?
“The drop in the unemployment rate combined with upward revisions for the payrolls gains in the previous two months appears to have encouraged the view that there is sufficient accumulated progress for the Fed to push ahead with its plans to taper its bond buying programme in the coming months.”
“The factors that have underpinned the USD in recent months remain in place and we maintain our view that the USD will stay on the front foot into the winter in the Northern Hemisphere.”
“We have brought forward our EUR/USD 1.15 target from a 12-month to a three-month view and don’t expect the USD to embark on a significant retracement until emerging markets are back in favour.”
“While there is scope for corrective activity in EUR/USD in the coming weeks, we would view pullbacks as opportunities to extend long USD positions.”
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