As discussed in the US Dollar (USD) section above, there is perhaps a narrower path at this stage for pro-cyclical currencies to benefit from a weaker US macro story, ING’s FX strategist Francesco Pesole notes.

Waiting for the nest US data report

“While we would favour JPY and CHF in this environment, the euro should still benefit from its liquidity conditions in a defensive risk environment and outperform higher-beta currencies. In other words, we are not as concerned for EUR/USD as we are for the likes of AUD/USD or NZD/USD that a softer US macro environment may have a net-negative impact due to the softer equities and a Fed pricing that is already dovish.”

“Our preference remains for EUR/USD to hold above 1.1000 into tomorrow’s US ISM services and Friday’s payrolls. If we are right about a softer payroll figure, then we should see it trade back above 1.110 by the end of the week.”

“The eurozone calendar is not very inspiring today. There are some final PMI reads for August and July’s PPI data for the eurozone, which normally does not have a major market impact. On the ECB side, we’ll hear from Francois Villeroy, who is generally considered neutral in the hawk-dove spectrum.”