EUR/USD: the euro remains marble after fitch sanction

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The sanction fell: the Firch agency has downgraded the French sovereign note to A+, which in 20 would be equivalent to 16. Reacting to the loss of double A, Thierry Breton, ex-European commissioner in an interview with the gallery on Sunday, deplored that “France has just changed division. The worrying is that we are paying more and more dearly the funding of our deficits and the refinancing of our Debt. First budgetary position of the nation, is on the way to 100 billion euros “.

This degradation occurs in the middle of instability in the second economic power of the euro zone.

“The agency also notes the robustness and the great diversity of the French economy which shed light on the stability of perspectives”, notes Philippe Waechter is director of Economic Research at Ostrum Asset Management. “The adjustment made by the Fitch Agency will have no strong impact on the market since the interest rate on the obligations of the French State was already higher than that generally corresponding to the previous rating of AA-“.

Indeed on the exchange market, the pair of Euro / dollar currencies remains almost stable this Monday in the immediate vicinity of its mobile average at 50 days, while the CAC even pays the luxury of outperforming the Dax.

The exchange market is now turning to the Fed and the outcome on Wednesday of a monetary policy committee. It should result in a decrease in the remuneration of Fed funds of 25 base points, or even 50 base points. The institution will be based, in its decision, on a slowdown in the dynamics on the employment front, and recent inflation figures without unpleasant surprises.

“Since Jackson Hole’s speech to Jackson Hole, it has become obvious that the Fed reaction is focused more on the labor market than on inflation. Although data show that a large part of the low labor market comes from a lower supply (especially on the side of immigration), demand also shows signs of weakening. Indeed, advanced indicators like the Growth Employment should still slow down, “said Claudia Panseri, Chief Investment Officer at UBS WM France.

At the end of this high mass of the planet’s Argentiers, the boss of the Fed clearly paved the way to a resumption of the monetary easing movement.

The largest macroeconomic statistics of the past week was published Thursday across the Atlantic: these are CPIs, for consumer prices (Consumers’ Price Index), one of the most direct measures of inflation. No surprise, inflation increases, by +2.7% to +2.9% at an annual rate, for the widest product basket, therefore including food and energy. However, it was expected.

The day before the operators were already aware of an inflation indicator, with barometer value that, the prices for American production for the month of August. And against all expectations, the production price index (PPI) fell 0.1% while the consensus awaited an increase of 0.3%. They had increased by 0.7% in July.

Note that the Friday session was marked by a surprise drop in the consumer confidence index (U-Mich), in preliminary data. This Monday, the trades will take note of the manufacturing index of the Fed de NY at 2:30 p.m.

At midday on the foreign exchange market, the euro was treated against $ 1,1750 approximately.

Key graphics elements

The pair of Euro / dollar currencies is in the marked ascending phase, background, above an oblique right that makes sense. We have represented this linear level of graphic support in black. In the immediate future, we will keep an eye attentive to the relative positioning of the mobile averages at 20 (in dark blue) and 50 days (in orange) to optimize the entry points. The dynamics of Bollinger strips is also under close surveillance.

Medium term

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on Euro dollar parity (Eurusd).

We will keep this neutral opinion as long as the EURO Dollar (EURUSD) prices are positioned between the USD 1,1608 support and the resistance to 1,1835 USD.

Daily data graphics