EUR: Becalmed
EUR/USD continues to trade in very narrow ranges, with US Treasury yields and USD/CNH probably the main short-term drives in thin summer markets. 1.0850-1.0930 looks to be the short-term range and we do not see a local catalyst for a breakout until tomorrow's release of the flash PMI readings for August. As to tightening expectations, the market only now prices in 20bp of rate hikes by the turn of the year - probably underestimating the chance of a 25bp ECB rate hike in September.
The Eurozone data calendar is light today. But amidst the pessimism in the Eurozone we should at least see a better monthly current account surplus reading - somewhere in the EUR10-20bn area. Remember this compares to the huge EUR35bn monthly deficits seen a year ago, when the spike in energy prices sank the euro.
Elsewhere, high US rates are keeping under pressure the high beta European currencies of Norway's krone and Sweden's krona. It seems a long time until the krona could possibly derive some support from the next Swedish Riksbank meeting (September 21st) meaning that EUR/SEK probably trades 12.00 in the interim.EUR/USD Rangebound Ahead of Data Releases and Rate Expectations
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