Scanning through some of the notes in response to the ECB.
ps. If you missed the European Central Bank news, summary here:
MUFG are projecting a 1.1050 and 1.1350 EUR/USD range next week.
- While the ECB disappointed expectations for an imminent rate cut, they did still signal that rate cuts are coming soon and could be accompanied by a tiered reserve remuneration system.
- The ECB is hoping that expectations for future easing will outweigh the lack of action today. It leaves the euro subject to some upside risk in the week ahead if the Fed then delivers a larger than expected 50 basis point rate cut.
MUFG switch their attention to the Fed and implications further out for euro:
- We believe the risk of a larger Fed rate cut has diminished recently. The recent agreement to extend the US debt ceiling, the resumption of US-China trade talks, and firmer US data flow have eased downside risks for the US dollar. In these circumstances, we are sticking to our bearish bias for EUR/USD.
More on the view further out:
- strong signal from the ECB that they are planning a package of easing measures as soon as at their next policy meeting in September should help to keep the euro under downward pressure in the coming months
