Output Gap

How BofA Learned To "Stop Fighting Central Banks" And Love Shorting The Euro

In a new report that may come as music to the ears of Mario Draghi, who has been valiantly hoping to show the European economy recovering while keeping the EURUSD below the "red line" of 1.20, BofA FX strategist Athanasios Vamvakidis is out with a new note today urging currency traders to "stop fighting the central banks", in other words stop selling the USD and buying the EUR, and recommends shorting the EURUSD to 1.15 with a 1.21 stop loss. 

Goldman Is Troubled By The Fed's Growing Warnings About High Asset Prices

"At this point, the FOMC does not need additional reasons for gradual further tightening, which a traditional reaction function based on the dual mandate suggests is already warranted. But Fed officials do appear more concerned about financial stability risks, and this could strengthen the case somewhat for tightening in the future."

IMF Rings The Alarm On Canada's Economy

"On the downside, risks stem from several potential factors—including the risk of a sharp correction in the housing market, high uncertainty surrounding U.S. policies, or a further decline in oil prices—that can be mutually reinforcing"

BOE Keeps Rate At 0.25%, Warns Rates May Rise Faster In Case Of "Smooth" Brexit

"...the Committee judges that, if the economy follows a path broadly consistent with the May central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the very gently rising path implied by the market yield curve underlying the May projections."

A Technical Look At The FX Week Ahead

All eyes on Sunday’s French election result, but little evidence of defensive positioning in the EUR. GBP continues to fly the flag, batting off the negative mood over the latest Brexit exchanges. Commodities in focus, but tentative signs of some near term relief. CAD overstretched. US jobs report mixed at best.

Core Eurozone Inflation Surges To 4 Year High As CPI Nears ECB Target

Mario Draghi's job just became a little more difficult, because one day after the head of the ECB surprised markets with a more dovish statement than expected stressing risks for European inflation, on Friday morning Eurostat reported that Euro zone inflation rose by more than expected to the European Central Bank's target and core inflation increased to its highest level in four years.