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USD needs Draghi’s help to rise – TD Securities

FXStreet (Barcelona) - According to Shaun Osborne and Martin Schwerdtfeger, FX Strategists at TD Securities, the markets failed to get a strong push in spite of better than expected US data released yesterday, but today’s Draghi’s remark did for EUR/USD what US data couldn’t.

Key Quotes

“The markets could not decide what to do with the USD yesterday; better than expected CPI data and a great—not just good—Philly Fed survey should have been good news for the big dollar—and it was, briefly before the markets knocked it back again. Even the contrast with the disappointing EZ data earlier in the session could not help EURUSD extend lower.”

“Overnight, EURUSD was hit hard by dovish comments from ECB President Draghi; his remark that the ECB will do what it has to raise inflation and inflation expectations “as fast as possible” may boost expectations of more ECB easing sooner rather than later.”

“Recall that the ECB moves to a 6-week meeting schedule a la Fed in 2015 so that puts the first meeting of the New Year in late January; that “gap” and Draghi’s sense of urgency may serve to boost thoughts of more action being unveiled at the December policy meeting.”

“US yields remain resolutely range-bound, meanwhile, and are providing no directional help for the markets that seems to be slipping into holiday mode.”

“There’s not much on tap in terms of US data today so flows and technicals will dominate. A retest of the early November low around 1.2360 looks likely near-term.”

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