Risk appetite made another attempt at stabilization overnight. European investors decided they didn’t want to play along, however, at least initially. Looking forward, we will need to see what happens as North American players settle in and begin to react, in the opinion of analysts at TD Securities.
Key quotes
“A quiet data and events calendar keeps our attention focused elsewhere. Today’s speech from Lagarde and the US New Home Sales report are unlikely to spark much of a reaction. We note, however, that the housing sector has been more of a bright spot for the US economy lately.”
“We think the latest rebound in EUR/USD may now be complete as contagion concerns become more entrenched in Europe. We have maintained a sell-on rallies bias in recent days, and we now think that time may be at hand. If correct, this may be a cost-effective entry point to position for a renewed move lower via options.”
“Risk reversals have edged back toward neutral in sympathy with the modest bounce in spot. If we are correct, however, and spot’s risks are now skewed to the downside, this may provide a cost-effective entry point to position for a renewed move lower via options.”
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