Dirham liquidity: a return to more favorable conditions

International highlights

Monetary status quos support the Dollar

The EUR/USD pair depreciated by -0.20%, reaching 1.1160 by the end of the week. The monetary status quos from the Fed and the ECB in October supported the Dollar this week, as did the announcement of Christine Lagarde’s early departure. These decisions are justified by an uncertain geopolitical environment and inflation that remains off target. On the macroeconomic front, initial jobless claims in the United States came in at 194K, down -1K over the week. Market attention now turns to the December meetings, with expectations of +25 bps hikes from both the Fed and the ECB.

MAD evolution and foreign exchange market liquidity indicators

The Dirham supported by easing liquidity

USD/MAD depreciated by -0.16%, moving from 9.83 to 9.81 by the end of the week. This was driven by a liquidity effect favorable to the Dirham this week. The liquidity effect stood at -0.18%, reflecting an easing of Dirham liquidity conditions on the Moroccan interbank foreign exchange market. The basket effect, for its part, came in at +0.02%, in line with the Dollar’s appreciation on the international market this week. Against this backdrop, liquidity spreads came in at +0.8%, an easing of -18 BPS at the weekly close.

Volatility indicators

Brent jumps amid tensions around Hormuz

This week’s central bank decisions, marked by a monetary status quo from both the Fed and the ECB, reflected high uncertainty linked to recent developments in tensions around the Strait of Hormuz. In the same vein, Brent contracts are trading around $118/bbl at the end of the week, reviving inflationary fears for all energy-importing countries. In view of these developments, market volatility remains elevated, warranting the hedging of operations over the short term.

EUR/USD outlook – BLOOMBERG

Broker forecasts were broadly revised this week. The pair is expected to trade around 1.13 in Q4-26 and Q1-27, versus 1.14 a week earlier. In Q2-27, it is still expected at 1.14. For Q3-27, the target is now lowered to 1.15, versus 1.16 last week. For 2027, the pair should still trade around 1.16. Over the longer term, it is expected at 1.16 for 2028 and at 1.14 for 2029, versus 1.17 a week earlier.

In the United States, the Federal Reserve maintained a monetary status quo this week, keeping the Fed funds rate within the [3.75% - 4.00%] range, in an environment marked by high geopolitical uncertainty. On the macroeconomic front, continuing jobless claims stood at 1,701K versus 1,720K expected, and the employment cost index came in line with forecasts, at 0.8%. Based on these developments, markets are beginning to anticipate a +25 bps hike from the Fed at the December FOMC meeting, according to the CME FedWatch tool.

In the Eurozone, the ECB held its deposit facility rate steady at 2.25%, adopting a cautious tone in the face of energy inflation, while the surprise announcement of the early departure of its President, Christine Lagarde, opens a period of uncertainty over her succession. On the macroeconomic front, the unemployment rate for September came in at 6.5%, versus forecasts of 6.4%. Investors now anticipate a +25 bps ECB rate hike at the December meeting, according to the ECB Watch tool.

Upward revision of our 1-month horizon forecasts 

Given the EUR/USD parity forecasts and foreign exchange market liquidity conditions, we have maintained our USD/MAD projections for the 1-month horizon.

Broker expectations for EUR/USD point to an appreciation of the Euro against the Dollar over the 1- to 3-month horizons, relative to spot levels.

Dirham liquidity spreads, for their part, are expected to gradually narrow over the 1- to 3-month horizons, compared to current levels.

Under these conditions, target levels for the USD/MAD parity come in at 9.79, 9.84, and 9.93 over the 1-month, 2-month, and 3-month horizons, against a spot level of 9.81.

Target levels for the EUR/MAD parity come in at 11.13, 11.18, and 11.29 over the 1-month, 2-month, and 3-month horizons, against a spot level of 10.98.