EUR/USD has held onto its gains this week – though that largely looks a function of the slightly softer dollar. Yesterday's release of the German ZEW expectations index for November was not particularly encouraging. However, the aggregate ZEW figure for the eurozone as a whole ticked up, questioning whether Germany is increasingly becoming an outlier.
The carry trade suffered a stress test yesterday, when one popular target currency, the Hungarian forint, had to cope with prospects of wider budget deficits. After selling off 0.7%, the forint is already coming back bid. With volatility expected to stay low, it's hard to see any major unwinds of carry strategies in the near term
Hungary's September inflation numbers came in flat as expected, but we don't take long-term comfort in that. Price pressures are still far from the central bank’s target. Looking ahead, there is some light at the end of the tunnel. A warning, though: it could be a train
After a couple of months of stability, we look for the dollar bear trend to resume into year-end. EUR/USD should be trading up at 1.20 by that stage after three Fed rate cuts. Even though valuations look stretched in equity and credit markets, we still prefer a benign decline in the dollar and a supported environment for risk assets and activity currencies
After today's Labor Day holiday, this week's US calendar is packed with labour market data, culminating in Friday's August jobs report. Elsewhere, investors don't quite know what to make of an appeals court ruling Trump's universal tariffs illegal. Could it be a story of lost revenues weighing on the Treasury market? We expect the dollar to stay soft
It’s becoming increasingly clear that Trump’s dismissal of Lisa Cook is not going to have a big short-term FX impact. The implications may only play out in the longer run, as the current focus remains more on data. French politics also appears to be treated with plenty of caution by the currency market. We think EUR/USD can stabilise today
