EUR/USD remains vulnerable – Westpac

Reports that Draghi will not offer any fresh QE tapering insights are not especially significant as Draghi signalled clearly a while ago that a QE tapering decision won't be made until autumn explains Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“EUR/USD remains vulnerable to pockets of better than expected US data, with more to come potentially – three year high in the Fed Empire survey for example hints at a potentially strong round of PMIs for August.”

“But it’s hard to see the USD mounting a sustained move higher – US debt ceiling and gov’t shutdown risks loom in late Sep/Oct and Fed Dec hike doubts are unlikely to go away anytime soon.”

“EUR probably trades in similar fashion in coming weeks as the USD going into the Fed 2013 taper. Back then the USD was persistently well bid for much of H2 and only corrected meaningfully lower after the Dec ‘13 formal announcement (i.e. buy the rumour sell the fact). ECB on course to pre-announce a taper 7 Sep and formally deliver 26 Oct.”