Weekly Forex Analysis: Jerome Powell’s debut will set the course

Weekly Forex Analysis: Jerome Powell’s debut will Set the course

Analysis Department of Bankinter offers its forecasts for the next behavior currencies:

Eurodollar (€ / USD)

The key for the next few days will be the semi – annual appearance of Jerome Powell to Congress (Tuesday). Being his first appearance as chairman of the Fed and taking into account the recent rise in volatility, we believe that Powell will avoid displaying a tone clearly  hawkish  and will deliver a continuity message gradual normalization of monetary policy . Therefore, we believe the Eurodollar should not record large fluctuations. 

Estimated range (week): 1,226 / 1,242. 

Euroyen (€ / JPY)

We think it is unlikely that the Bank of Japan withdraw stimulus because:

  1. The inflation (+ 1.4%) is kept away from the lens of + 2%.
  2. The macro provides signals break (January Industrial Production: -4.2% estimated). By reducing the fear of volatility and inflation scenario has normalized and the direction of monetary policy has not changed.

For this we maintain the range 2018 estimated at 130/140 and 135/145 for 2019. In the short term should lateralization. 

Estimated range (week): 131.1 / 133.1. 

Eurolibra (€ / GBP)

The pound remained stable despite the recent slowdown in economic activity – GDP grows 1.4% in fourth quarter 2017 vs. 1.5% previously – and disagreements within the Conservative Party on the possibility of a ” Brexit ” hard.

This week the focus will be on the PMI Manufacturing and evolution of Housing Price

Estimated range (week): 0.878 / 0.882. 

Eurosuizo (€ / CHF)

Continued strength of the franc despite the deterioration in the trade balance in Switzerland and monetary policy Swiss National Bank- aimed at weakening the divisa-.

This week, attention will focus on the evolution of GDP and leading indicators of activity (KOF) in Switzerland. 

Estimated range (week): 1,145 / 1,152

 

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