Jeremy Stretch. Head of G10 FX Strategy at CIBC, joined Tip Tv to share his observations on EUR/USD, and the rate hike scenario in US and UK.
Key points from the video:
Lockhart’s comments catalyst for EUR down move Greek banks solvency crisis ahead? EUR bias is for a move lower UK and US to see a rate hike this year
EUR/USD downside remains in play
Stretch says that although EUR has been susceptible to Greece related headline risks, the bigger picture remains in favour of monetary policy and fundamentals. Answering to the day-to-day impact of economic data on EUR, Stretch mentions that it depends on the market bias. He further states that there is enough room to add onto EUR shorts.
On price action, Stretch believes that EUR will move lower, and the pair awaits a catalyst to break below the key 1.08 level. On the long-term, he prefers maintaining a structural long position on the currency, as there exists a big differential between 3months and 12months trading.
UK and US closer to rate hikes
Stretch favours a Fed rate hike in September and the Bank of England to raise rates by November. The BoE members shifting to a 3-0 vote in favour of a hike will bring forward the expectations for a UK rate hike. On the US rates scenario, he believes the nonfarm payrolls this week will set the tone. On the UK economy, Stretch believes the country will be able to withstand the rate hike. He further comments on the impact of GBP and USD on their respective economies.