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2.625% Jul-42 RFGB


(V1) Bullish Following Bear Channel Breakout


(X1) Heading North

EURO-DOLLAR: Westpac recommend buying EUR/USD at $1.1350, with a target of
$1.1620 and a stop at $1.1280.
- Westpac reason that "the USD's recent pullback, triggered by Chair Powell's
comments that the Fed is flexible and patient, along with weaker PMIs signaling
a waning of US growth outperformance, has further to run. Upcoming Fedspeak (16
slated this week and next, Chair Powell and Vice Chair Clarida 10 Jan) should
underscore market conviction that Fed policy normalisation is not a pre-set auto
pilot path. Strong US jobs data allayed slowdown concerns but doubts will
persist; Q1 US data tends to systematically underwhelm expectations. Partial US
government shutdown is now in its third week, lopping off an estimated 0.15ppts
off Q12 growth so far with no clear end in sight. The White House threat to
bypass congress and invoke emergency powers to build a wall on the southern
border will raise the level of partisan rancour in Washington to new heights."
MNI London Bureau | +44 0203-865-3809 |