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3 Jun 2015
EUR/USD: Will US data be strong enough to counterbalance the Greece optimism? – KBC
FXStreet (Barcelona) - The KBC Bank Research Team predicts upside risks to consensus forecast for US ADP employment and ISM non-manufacturing data, but adopts a patience approach on building any EUR/USD shorts.
Key Quotes
“The US data are interesting, with the ADP labour market report, the trade balance and the non-manufacturing ISM. We expect the data to confirm the scenario of a gradually improvement of the US economy with upside risks to the consensus. In this scenario, the question is whether the US data will be strong enough to counterbalance the Greek driven short-squeeze of the euro.”
“Yesterday, we indicated that it was dangerous to be short euro going into Friday’s deadline on Greece, but the reaction to the Greek developments was extremely violent. Yesterday’s move only illustrates that the market was a bit overly optimistic on the dollar as recent eco data showed tentative signs of improvement.”
“We hold on to the view that the US data will soon come back to the forefront once a Greek debt deal would be reached. Some kind off a buy-the rumour, sell-the-fact reaction in the euro is very well possible at that time. Of course, this doesn’t tell anything on how far the current short squeeze has to go as long as political manoeuvring on a debt deal persists.”
“We wait for signs that the short-squeeze has run its course to sell EUR/USD. Of course, this approach will come under pressure in case of a disappointing US payrolls report. However, this is not our preferred scenario.”
“The 1.1467/1.1534 area is a key resistance. Our baseline scenario is that this resistance should hold, even in case of a Greek debt agreement. A break beyond that level could be an important warning signal that the currency market questions the scenario of a better economic performance in the US in the months/quarters ahead.”
Key Quotes
“The US data are interesting, with the ADP labour market report, the trade balance and the non-manufacturing ISM. We expect the data to confirm the scenario of a gradually improvement of the US economy with upside risks to the consensus. In this scenario, the question is whether the US data will be strong enough to counterbalance the Greek driven short-squeeze of the euro.”
“Yesterday, we indicated that it was dangerous to be short euro going into Friday’s deadline on Greece, but the reaction to the Greek developments was extremely violent. Yesterday’s move only illustrates that the market was a bit overly optimistic on the dollar as recent eco data showed tentative signs of improvement.”
“We hold on to the view that the US data will soon come back to the forefront once a Greek debt deal would be reached. Some kind off a buy-the rumour, sell-the-fact reaction in the euro is very well possible at that time. Of course, this doesn’t tell anything on how far the current short squeeze has to go as long as political manoeuvring on a debt deal persists.”
“We wait for signs that the short-squeeze has run its course to sell EUR/USD. Of course, this approach will come under pressure in case of a disappointing US payrolls report. However, this is not our preferred scenario.”
“The 1.1467/1.1534 area is a key resistance. Our baseline scenario is that this resistance should hold, even in case of a Greek debt agreement. A break beyond that level could be an important warning signal that the currency market questions the scenario of a better economic performance in the US in the months/quarters ahead.”