Buy the Dip: Gold Holds Strong at $3980, Targets $4150 
Denmark Central Bank Intervenes to Support Krone Peg Against Euro 
BOJ Hawk Signals Faster Interest Rate Hikes Amid Inflation Risks 
Smartphones are helping filmmakers tell the stories the movie industry overlooks 
Japan Signals Surprise Yen Intervention Strategy as BOJ Hawkish Stance Puts FX Traders on Alert 
Malaysia Central Bank Moves to Support Ringgit Amid Foreign Fund Outflows 
China Keeps Loan Prime Rates Unchanged for 13th Straight Month as Policymakers Prioritize Credit Demand Recovery 
In a rebuke to Trump, the Supreme Court rules that birthright citizenship is the law of the land 
Fed Chair Kevin Warsh Signals Policy Overhaul as Hawkish Rate Outlook Rattles Markets 
Japan Signals Preference for Low Interest Rates as BOJ Policy Debate Intensifies 
USA at 250: the Black American struggle for life, liberty and the pursuit of happiness 
The ECB has signaled a taper announcement for September, while the Fed has been noncommittal on the timing of balance sheet normalization, prompting a Bund-led rise in DM yields which has been EUR supportive (refer above chart).
Well, it’s ECB today..! President Draghi is expected to signal a dovish tightening. Managing the communication will not be easy; at the same time seeking to maintain market expectations that policy normalization is underway, but also avoiding another bond sell-off and euro appreciation.
The base case is for the ECB to announce taper at the September meeting.
While we expect the Fed to announce balance sheet normalization in September as well, the Fed has refrained from sending a firm signal on timing thus far.
The bearish forecast reflected the view that the ECB would be quieter on the taper in the near-term.
Moreover, markets appeared better prepared for an ECB taper than for the onset of Fed balance sheet normalization, as reflected by already-long EUR positions and overshooting valuations vs rates, so any rise in yields was expected to be led by the US.
Hence, a more activist ECB warrants a modest upgrade to the EURUSD forecast, long-standing medium term forecast has been bullish (4Q at 1.15 and 2Q18 at 1.16), while our near-term forecast was bearish (3Q EURUSD target was put at 1.08).
