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30 Sep 2013
Flash: EUR/USD will probably track lower this week - Westpac
FXstreet.com (Barcelona) - Given the resurfacing tensions in Italian politics and a government shutdown in the US, trying to gauge what direction the EUR/USD will trade this week is not an easy task.
However, on balance, Westpac Strategist Richard Franulovich believes that since EUR/USD is at relatively hefty levels and IMM data shows net EUR longs at their highest levels since May 2011, "EUR/USD probably tracks lower through this week" he argues.
Key Quotes
"Event risk early in the week is negative for the USD, i.e. a likely US government shutdown and a probable weak ISM update (to bring it more into line with all the weaker regional surveys)."
"However, later in the week Draghi will likely undercut EUR, reiterating the potential for another LTRO and repeating the dovish forward guidance on rates. The weekend news in Italy is unambiguously negative for EUR too."
"USD and EUR shorts against CHF and JPY arguably offer better mileage to capture the lack of any redeeming qualities for the USD and EUR this week. The risk aversion qualities of CHF and JPY should bubble to the surface amid a probable US shutdown this week and political crisis in Italy."
However, on balance, Westpac Strategist Richard Franulovich believes that since EUR/USD is at relatively hefty levels and IMM data shows net EUR longs at their highest levels since May 2011, "EUR/USD probably tracks lower through this week" he argues.
Key Quotes
"Event risk early in the week is negative for the USD, i.e. a likely US government shutdown and a probable weak ISM update (to bring it more into line with all the weaker regional surveys)."
"However, later in the week Draghi will likely undercut EUR, reiterating the potential for another LTRO and repeating the dovish forward guidance on rates. The weekend news in Italy is unambiguously negative for EUR too."
"USD and EUR shorts against CHF and JPY arguably offer better mileage to capture the lack of any redeeming qualities for the USD and EUR this week. The risk aversion qualities of CHF and JPY should bubble to the surface amid a probable US shutdown this week and political crisis in Italy."