International highlights
The Dollar weighed down by employment data
The EUR/USD pair appreciated by +0.47% this week, reaching 1.1437. This evolution was primarily driven by disappointing U.S. macroeconomic data. On the one hand, ADP non-farm payrolls declined by -24K to 98K in June. On the other hand, continuing jobless claims came in at 1,814K, against a consensus of 1,810K. Meanwhile, the June unemployment rate edged down by -0.1% to 4.2%. Despite these latest figures, markets continue to price in a further +25 BPS Fed Funds rate hike by year-end.
MAD evolution and foreign exchange market liquidity indicators
Double favourable effect on the Dirham this week
The USD/MAD pair depreciated by -0.24% this week, moving from 9.38 to 9.35. This move was driven by a dual favourable effect on the Dirham. On the one hand, the basket effect came in at -0.22%, reflecting the depreciation of the Dollar on the international market. On the other hand, the liquidity effect came in at -0.02%, reflecting a slight easing of liquidity conditions on Morocco's interbank foreign exchange market. Under these conditions, liquidity spreads eased by -2.3 BPS, settling at -2.58% at the end of the week.
Volatility indicators
Prices stabilization around pre-conflict levels
Brent crude prices fluctuated around $72/bbl this week, holding close to levels observed prior to the outbreak of the Middle East conflict. Geopolitical concerns nevertheless remain, particularly as markets await the final outcome of the Doha talks. In this context, we continue to recommend that market participants favour short-term hedging strategies, in an environment characterised by elevated volatility.
EUR/USD outlook – BLOOMBERG
Broker forecasts for EUR/USD were significantly reviewed downward this week. The pair is expected to trade at 1.16 in Q3 2026, a level at which it should stabilise through Q4 2026. For Q1 2027, the pair is still expected at 1.17, stabilising at that level through Q2 2027, versus 1.18 anticipated a week earlier. For full-year 2027, the target is now set at 1.18, versus 1.17 the previous week. Over the longer term, the target now stands at 1.19 for 2028 and 2029, versus 1.20 anticipated last week.
In the United States, hiring sharply slowed, as reflected in recently released data. ADP non-farm payrolls for June came in at 98K, below the consensus of 118K. Initial jobless claims printed at 215K, down -1K from the previous week. The June unemployment rate stood at 4.2%, below the forecast of 4.3%. In light of these elements, markets are pricing in a +25 BPS Fed rate hike at the September Federal Open Market Committee (FOMC) meeting, according to the CME FedWatch tool.
On the Eurozone side, the HCOB Manufacturing PMI for June came in at 51.4, marginally above the forecast of 51.3. Additionally, the June CPI stood at 2.8%, down -0.2% from the previous month. In light of these developments, investors expect the ECB to proceed with a further +25 BPS rate hike in September, according to the ECB Watch tool.
Maintaining our forecasts at the 1-month 2-month and 3-month horizons
In light of EUR/USD forecasts and liquidity conditions on the foreign exchange market, we have maintained our USD/MAD projections at the 1-month, 2-month and 3-month horizons.
Broker expectations for EUR/USD point to an appreciation of the Euro against the Dollar over the 1 to 3-month horizons, relative to current spot levels.
Dirham liquidity spreads are expected to ease at the 1-month horizon, and stabilize at the 2-month and 3 month horizons, relative to current levels.
Under these conditions, the USD/MAD target levels stand at 9.28, 9.28 and 9.28 at the 1-month, 2-month and 3-month horizons respectively, against a current spot level of 9.35.
The EUR/MAD target levels stand at 10.60, 10.60 and 10.60 at the 1-month, 2-month and 3-month horizons respectively, against a current spot level of 10.71.
