20 Nov 2015
EURUSD: Sell rallies in the pair – RBC CM
FXStreet (Delhi) – Elsa Lignos, Senior Currency Strategist at RBC Capital Markets, suggests that nothing has fundamentally changed in our view and we think any rally in EUR/USD up to 1.0870/90 (last seen pre-strong NFP) should attract fresh shorts.
Key Quotes
“If anything, comments from FOMC officials have reinforced our view that markets may be too complacent in their definition of “gradual”. The forward curve is priced for just three hikes by the end of next year (RBC looking for five).”
“Mester (hawk) said the Sept dots are the best guide to the intended path (also five hikes by end 2016). Lockhart (more dovish) said he expects rate hikes at “not every meeting” (though no one expects that). Fischer confirmed once again the overwhelming Fed rhetoric of a very likely Dec lift-off (he says the Fed has done everything to avoid a surprise); given that the odds of a Dec hike are now at ~75%, our US economists note that a surprise at this point would be no move. He says foreign central bankers have told the Fed to “just do it”.”
Key Quotes
“If anything, comments from FOMC officials have reinforced our view that markets may be too complacent in their definition of “gradual”. The forward curve is priced for just three hikes by the end of next year (RBC looking for five).”
“Mester (hawk) said the Sept dots are the best guide to the intended path (also five hikes by end 2016). Lockhart (more dovish) said he expects rate hikes at “not every meeting” (though no one expects that). Fischer confirmed once again the overwhelming Fed rhetoric of a very likely Dec lift-off (he says the Fed has done everything to avoid a surprise); given that the odds of a Dec hike are now at ~75%, our US economists note that a surprise at this point would be no move. He says foreign central bankers have told the Fed to “just do it”.”