23 Dec 2015
USD to strengthen gradually versus EM and commodity currencies – Danske Bank
FXStreet (Delhi) – Research Team at Danske Bank, expects the USD to strengthen gradually versus EM and commodity currencies in coming months, as the market prices in slightly higher US rates while staying focused on the collapsing oil price.
Key Quotes
“This week the Argentine peso (ARS) depreciated by 40% after capital controls were lifted, while Fitch downgraded Brazil to junk status. This underlines the continued struggle in EM with or without higher US rates.”
“We believe that EUR/USD is a very different story, where stretched positioning will mitigate the downside. We expect EUR/USD to range trade between 1.05-1.10 over the coming three months as the market prices in a slightly more aggressive Fed. On 6-12 months, we expect EUR/USD to rise sharply towards 1.16 as the EUR is very undervalued at current levels and the market will eventually realise that we have seen the end of ECB easing.”
Key Quotes
“This week the Argentine peso (ARS) depreciated by 40% after capital controls were lifted, while Fitch downgraded Brazil to junk status. This underlines the continued struggle in EM with or without higher US rates.”
“We believe that EUR/USD is a very different story, where stretched positioning will mitigate the downside. We expect EUR/USD to range trade between 1.05-1.10 over the coming three months as the market prices in a slightly more aggressive Fed. On 6-12 months, we expect EUR/USD to rise sharply towards 1.16 as the EUR is very undervalued at current levels and the market will eventually realise that we have seen the end of ECB easing.”