Archive

November 29, 2024
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HEW: Euro Doves Face Reality

  • Resilient Euro area inflation and activity data (in the ESI) reiterated the need for ECB easing to be careful. Monetary policy divergence is priced far too widely, depressing EURUSD excessively. Schnable’s guidance was consistent with our contrarian pushback.
  • Next week’s calendar is quiet ahead of the usual pre-Christmas concentration. US nonfarm payrolls are the uncontested highlight, where we expect their rebound to be soft enough for the Fed to cut by 25bp in December.

By Philip Rush

November 22, 2024
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HEW: Misaligned Data Focus For FX

  • Euro weakness extended over the past week as markets discounted hawkish price and wage inflation. The market is excessively focused on activity growth rates and the PMIs rather than unemployment and the resulting underlying inflationary pressures.
  • Flash HICP for November may rise less than expected owing to base effects like German package holidays, but that is a temporary blip. Most other data have consistently warned against 50bp. The RBNZ’s likely 50bp cut again is an outlier.

By Philip Rush

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