Credit Suisse lowers three-month EUR/USD forecast to 1.05 from 1.10
Rationale:
The 20 October ECB meeting was interpreted as leaving open room for continued easy monetary policy, with no sudden tapering shocks seemingly in the pipeline. This contrasts with the apparent policy shifts underway in Japan and the US. Recent comments from ex-BOJ board member Shirai helped solidify a growing market suspicion that September’s BOJ move to cap rates was a first step towards winding down asset purchases in Japan. And in the US, the market seems willing to price in a December Fed rate hike despite suggestions from key officials like Yellen that they are still willing to look at the US economy glass as half empty. It seems rising inflation expectations and a tightening US labor market are enough to convince investors to continue leaning in favor of US rates trending higher.
