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4 Sep 2015
EUR/USD downside below 1.1050 on the cards after Nonfarm Payrolls?
FXStreet (Guatemala) - EUR/USD has stuck to a tight range ahead of the key Nonfarm Payrolls looking over the FX space today. The unit got plenty of action overnight from the announcements of the ECB who set a gloomy picture for the global and EZ economy.
In respect of the EZ, the ECB have raised the ceiling of sovereign bond ownership to 33% from 25%." Analysts at Brown Brothers Harriman explained that this eases a self-imposed constraint on purchases, and will give the ECB more operational flexibility. They also cut their growth forecasts lower. So, 2015 GDP growth is now seen at 1.4% which is down from 1.5%.
ECB cuts growth and inflation outlook
Then, growth next year has been cut to 1.7% from 1.9% and 2017 GDP growth down to 1.8% from 2.0%. Inflation forecasts were also cut by a bit more than growth. So, CPI this year is expected to rise by 0.1% and below the 0.3% estimated in June. Then, the 2016 inflation forecast has been cut to 1.1% from 1.5% and the 2017 CPI forecast was trimmed back to 1.7% from 2.0%.
ECB making Fed's job harder
The timing of this move is not favourable for the Fed and makes life that more tougher for Yellen as analysts at ANZ explained here. All in all, this a very dovish outlook from the ECB who left the door open to the possibility, depending on how much worse things get in respect to the divergence from their current targets, of further QE by the end of this year.
EUR/USD awaits Nonfarm Payrolls
We now await the Nonfarm Payrolls tomorrow as the next catalyst for the major, and analyst Lee Hardman at The Bank of Tokyo Mitsubishi UFJ explained, " With tomorrow's jobs report expected to be reasonable, monetary policy divergence is set to weigh on EUR/USD once again, especially if market conditions stabilise."
EUR/USD downside is compelling
Technically, in the 4 hours chart, Valeria Bednarik, chief analyst at FXStreet explained that the readings favor the downside, with the technical indicators barely recovering from oversold levels, and well below its 20 SMA. "The upcoming move will depend solely on the NFP result and how the market takes it, with a break below 1.1050 most likely confirming another day of gains for the USD."
In respect of the EZ, the ECB have raised the ceiling of sovereign bond ownership to 33% from 25%." Analysts at Brown Brothers Harriman explained that this eases a self-imposed constraint on purchases, and will give the ECB more operational flexibility. They also cut their growth forecasts lower. So, 2015 GDP growth is now seen at 1.4% which is down from 1.5%.
ECB cuts growth and inflation outlook
Then, growth next year has been cut to 1.7% from 1.9% and 2017 GDP growth down to 1.8% from 2.0%. Inflation forecasts were also cut by a bit more than growth. So, CPI this year is expected to rise by 0.1% and below the 0.3% estimated in June. Then, the 2016 inflation forecast has been cut to 1.1% from 1.5% and the 2017 CPI forecast was trimmed back to 1.7% from 2.0%.
ECB making Fed's job harder
The timing of this move is not favourable for the Fed and makes life that more tougher for Yellen as analysts at ANZ explained here. All in all, this a very dovish outlook from the ECB who left the door open to the possibility, depending on how much worse things get in respect to the divergence from their current targets, of further QE by the end of this year.
EUR/USD awaits Nonfarm Payrolls
We now await the Nonfarm Payrolls tomorrow as the next catalyst for the major, and analyst Lee Hardman at The Bank of Tokyo Mitsubishi UFJ explained, " With tomorrow's jobs report expected to be reasonable, monetary policy divergence is set to weigh on EUR/USD once again, especially if market conditions stabilise."
EUR/USD downside is compelling
Technically, in the 4 hours chart, Valeria Bednarik, chief analyst at FXStreet explained that the readings favor the downside, with the technical indicators barely recovering from oversold levels, and well below its 20 SMA. "The upcoming move will depend solely on the NFP result and how the market takes it, with a break below 1.1050 most likely confirming another day of gains for the USD."