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- EUR/USD to tank toward 1.05, GBP/USD to 1.19 if US data exceeds expectations – SocGen
EUR/USD to tank toward 1.05, GBP/USD to 1.19 if US data exceeds expectations – SocGen
US Consumer Price Index (CPI) report will be followed by Retail Sales tomorrow. Economists at Société Générale analyze how the upcoming data could impact the US Dollar.
Test of corrective February bond/FX trend
“We forecast a gain in headline of 0.4% MoM, the largest since October. A hot number that lends credibility to the repricing of the Fed outlook could mean more trouble for risk assets and high beta FX, accelerate the unwinding of bullish January trends which have characterised the first two weeks of February.”
“Underwhelming data will trigger short covering in bonds (lower yields, steeper curve) and could place the dollar back on a weakening trend.”
“Dollar bulls will be inclined to raise targets to 105 area for the DXY (+1.9%) if data today and tomorrow exceeds expectations. This would correspond to 1.05 in EUR/USD and 1.19 in GBP/USD.”
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