Are you looking to make the most out of the current market conditions? According to ING’s FX strategist Francesco Pesole, there is a promising opportunity for pro-cyclical currencies to thrive amidst a weakening US macroeconomic landscape.
While traditional safe-haven currencies like JPY and CHF are favored in this environment, the euro is also expected to perform well due to its liquidity advantages in a defensive risk setting. This means that higher-beta currencies such as AUD/USD and NZD/USD may face challenges as the US macro environment softens, impacting equities and a dovish Fed sentiment.
For traders and investors, the focus should be on EUR/USD, with a preference for it to remain above 1.1000 leading up to key US data releases. If the anticipated softer payroll figures materialize, we could see EUR/USD climb back above 1.110 by the end of the week.
Today’s eurozone economic calendar may not be filled with exciting events, with final PMI readings for August and July’s PPI data expected. However, keep an eye on ECB’s Francois Villeroy’s remarks, as his position on the hawk-dove spectrum could provide valuable insights into future monetary policies.
Analysis: By focusing on currencies like the euro that are poised to benefit from a weaker US macro story, investors and traders can position themselves for potential gains in the current market environment. Keeping an eye on key data releases and central bank speeches will be crucial in making informed decisions and maximizing profits in the forex market. Stay informed and stay ahead of the curve with the right investment strategy.