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3 Sep 2015
EUR/USD has a bearish bias between 1.0900-1.1300 - BTMU
FXStreet (Guatemala) - Lee Hardman, Currency Analyst at The Bank of Tokyo Mitsubishi UFJ explained that the risk of renewed financial market turmoil of course remains high and once Chinese markets reopen there could once again be renewed fears over the prospect of a damaging slowdown to global growth.
Key Quotes:
"However, we see a greater chance at this stage of perhaps market participants reverting attention back to the factors that will ensure a continued wide divergence in monetary policy between the US and the euro-zone. Today, ECB President Draghi struck a dovish tone in the monetary policy press conference with both real GDP and inflation projections revised lower. A new paragraph in the introductory statement emphasised the ability of the ECB to adjust the QE program in terms of “size, composition and duration”. There was also a greater emphasis on foreign exchange which played a key role in monetary policy deliberations."
"The ECB was at this stage unsure to what extent the current turmoil may alter the achievement of the inflation target but it is clear to us that renewed volatility going forward will not lift the euro like before given the message today that additional monetary easing would probably be forthcoming. 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."
Key Quotes:
"However, we see a greater chance at this stage of perhaps market participants reverting attention back to the factors that will ensure a continued wide divergence in monetary policy between the US and the euro-zone. Today, ECB President Draghi struck a dovish tone in the monetary policy press conference with both real GDP and inflation projections revised lower. A new paragraph in the introductory statement emphasised the ability of the ECB to adjust the QE program in terms of “size, composition and duration”. There was also a greater emphasis on foreign exchange which played a key role in monetary policy deliberations."
"The ECB was at this stage unsure to what extent the current turmoil may alter the achievement of the inflation target but it is clear to us that renewed volatility going forward will not lift the euro like before given the message today that additional monetary easing would probably be forthcoming. 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."