17 November, AtoZForex.com, London – BNP Paribas has shared the latest signals from its G10 FX Momentum model which measures the strength of a currency’s trend taking into an account FX price action, rates and equities. This time, we have also added BNP Paribas commentary and analysis on today’s ZEW German sentiment and tomorrow’s FOMC Minutes release.
G10 FX Momentum model
Source: BNP Paribas
Following a temporary retracement, the USD’s bullish momentum continues to increase, scoring +66 out of +100. “All components of our momentum indicator – FX, rates and equities – have moved in favour of the USD in recent weeks,” BNP Paribas noted.
Comparing currencies within pairs, the strongest momentum signals, according to the FX Momentum model, continue to be bearish AUDUSD and AUDJPY and bullish GBPNOK and USDNOK.
German ZEW Sentiment
The improvement in German ZEW data for November has been likely due to rising expectations for further ECB easing and renewed EUR devaluation.
Nevertheless, the EUR should be insensitive to the release, “with the ECB very likely to press ahead with further easing measures despite improving sentiment,” BNP Paribas shares its view.
The view is based on the recent ECB spokesmen. Council member Nowotny reiterated the fact, on Monday, that the central bank needs to fight deflationary pressures while Praet argued that a negative affect on confidence following the terrorist attacks on Friday require monitoring.
FOMC Minutes Preview
The minutes from the FOMC’s October meeting are expected by BNP Paribas to indicate that the Fed’s initial outlook was on track and that the risks from foreign and financial factors had subsided.
Committee members probably emphasized that rate hike plans remained contingent on job market conditions not deteriorating further following two months of slower Non-Farm Payroll gains.
Consider reading: US inflation stables
Though their overall tone “will likely be more balanced than Fed-speak has been following October payrolls data, it’s hard to see how the meeting’s minutes would reduce the markets’ expectations for a December hike,” BNP Paribas projects.
Moreover, strategies for the pace of lift-off were likely also discussed, BNP Paribas adds, and would further indicate readiness of the Fed to act in December.
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