Wall Street Books Profits But Loses Some Momentum in Q3
Wall Street's profit-taking in Q3 comes amid signs of a modest recovery in the housing market, signaling a mixed economic outlook. The slight uptick in existing home sales could provide liquidity and consumer confidence, yet the diminished momentum reported across various sectors may weigh on investor sentiment. This dichotomy suggests a complex environment for currencies, as market players reassess their positions against potential shifts in monetary policy driven by economic indicators.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). The recent headlines indicate a cautious optimism but also highlight the need for further data to decisively shift sentiment.
How firms align
JPMorgan's target of 1.10 aligns with the conservative optimism that the market is exhibiting after the modest recovery in home sales. Conversely, BofA's lower target of 1.04 reflects a more bearish outlook, suggesting concerns over potential economic headwinds. Both perspectives illustrate the division within our coverage regarding future currency movements.
What the data shows
Recent reports suggest that the housing market's recovery may bolster consumer spending, yet firms continue to adjust their forecasts cautiously. For detailed insights, consult /research/consumerconfidence.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Wall Street shows profit gains but hints at slowing momentum.
- 02Watch existing home sales for potential consumer confidence boosts.
- 03Mixed economic signals highlight the complexity for FX traders.
- 04Modest recovery in housing sales may not rally broader markets.
Market implications
Next week, focus on the upcoming home sales report and its impact on USD strength, particularly with our consensus number of 1.075 for EUR/USD. Any deviations in sales figures could trigger shifts in positioning as traders adjust their forecasts.
Risks to this view
A significant downturn in new home sales would likely invalidate the bullish sentiment, pressuring the USD lower. Additional catalysts could include unexpected changes in Fed policy or leading economic indicators that disrupt the current narrative.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
Sources & References
How we cover this story