EUR/USD seen ending the week at current levels – Danske Bank

Spot is unlikely to break the current weekly range, according to Mathias Mogensen, Analyst at Danske Bank.

Key Quotes

“EUR/USD was relatively steady yesterday ahead of today’s inflation figures out of both the euro zone and the US. Neither data points should be able to change the near-term outlook for the ECB and Fed, respectively, though given that the ECB has itself some time with the stretched-out QE taper and the Fed December hike by and large seems a done deal”.

“We expect the cross to end the week around current levels. Separately, one thing to watch in relation to the Fed going forward is that the Board of Governors is the ‘least experienced’ in 30 years due to a lower level of seniority and fewer members on the committee”.

“We find evidence of a ‘Fed experience premium’ on USD over the period since 1973, which suggests that the change at the Fed next year may fuel an ‘inexperience risk premium’ on USD crosses. This provides a reason t o be bearish on USD crosses and (another) argument for keeping high hedge ratios on USD assets and income”.