Bunds lower, EUR/USD rangebound – Societe Generale

By FXstreet.com | Updated August 15, 2014 AAA

FXStreet (Edinburgh) - Kit Juckes, FX Strategist at Societe Generale assessed the recent performance by the German Bunds.

Key Quotes

“10-year Bund yields dropped through 1% for the first time yesterday after poor German GDP data and the euro went up. It didn't go up very far, but it's still a reminder that bond yields aren't really the big drivers of currencies”.

“Sub-1% Bund yields are supposed to send a message to policy-makers which in turn should result in a policy response that delivers inter alia, a weaker currency”.

“But unless the policy response is more than tinkering by the ECB and inaction by governments, I doubt it will be very effective. Growth will disappoint, rates will stay lower for longer, and a weaker euro will depend primarily on the dollar rallying”.

“We get Empire State manufacturing, PPI and industrial production today. A 0.5% increase in IP should be cheerful, but core PPI inflation likely dropped further and I fear that will be the main focus. Inflation isn't just anchored, it's been pummelled into submission”.

“The only other data due is UK 2Q GDP, expected at 0.8%. EUR/USD is in its 1.3330-1.3430 range, USD/JPY in its 101-103 range and GBP/USD just holding above 1.6660. The risk bounce is cheered by news that US high yield bond investors have started buying again after four weeks of outflows”.

You May Also Like

COMPANIES IN THIS ARTICLE
Related Forex Analysis
  1. Forex News

    Weekly Trading Forecast: Expect Heavy Seas Between NFPs, ECB and RBA

  2. Forex News

    Trading Video: Expect Volatility for the Dollar, Equities, Euro...Everything

  3. Forex News

    GBP/USD Stalls at Key Juncture - Outlook Hinges on BoE, NFP

  4. Forex News

    FX CFTC report - TDS

  5. Forex News

    CFTC Commitment of Traders Report - TDS

Trading Center