Forex Flash: EUR/USD sustained break above 1.2600 seems unlikely ahead of Bernanke's speech - BBH
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EUR/USD
FXstreet.com (Córdoba) - Trading remains choppy but the dollar retains a soft tone vs. the majors ahead of Friday, according to the BBH analyst team. "The euro appears likely to continue testing last week's high near $1.2600 but sustained break higher seems unlikely ahead of Bernanke's Jackson Hole speech at 10 AM EST Friday".
"However, as we have seen in the past, dollar selling ahead of perceived QE3 risks have invariably been followed by a recovery in the greenback when the Fed disappoints", they say. "We continue to think Bernanke will not signal QE3 this Friday, and so would look for levels to get short euros on Friday".
However, BBH notes that dollar gains will likely be limited given the event risk next Thursday (ECB meeting) and Friday (US jobs report). "Bloomberg NFP consensus is currently +120k vs. +163k actual in July, though that may be tweaked higher as PMI and ADP data emerge during next week. With consensus so low, it wouldn't take much to get an upside surprise that is dollar-positive next Friday", they add.
"However, as we have seen in the past, dollar selling ahead of perceived QE3 risks have invariably been followed by a recovery in the greenback when the Fed disappoints", they say. "We continue to think Bernanke will not signal QE3 this Friday, and so would look for levels to get short euros on Friday".
However, BBH notes that dollar gains will likely be limited given the event risk next Thursday (ECB meeting) and Friday (US jobs report). "Bloomberg NFP consensus is currently +120k vs. +163k actual in July, though that may be tweaked higher as PMI and ADP data emerge during next week. With consensus so low, it wouldn't take much to get an upside surprise that is dollar-positive next Friday", they add.
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