1Finance

Credit Agricole - Where To Sell Bounces

• In the very short-term further position-squaring related upside risk cannot be excluded as tighter monetary conditions as driven by the Fed and intact uncertainty as related to China may keep risk sentiment unstable. Most recent China PMI releases keep investors’ growth expectations strongly muted.
• However, from a broader angle, we expect risk sentiment to stabilize anew. This is mainly due to the notion that further improving growth prospects should ultimately compensate for rising Fed rate expectations.
• Elsewhere, a further appreciating EUR would increase downside risks to inflation and that may trigger a more aggressive rhetoric by ECB members.
• As a result to the above outlined conditions we remain in favour of selling EUR rallies towards 1.1100- 1200.

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