EUR/USD: watch Germany-U.S. 2Y yield spreads – Scotiabank

Analysts at Scotiabank explained that market participants intensify their focus on relative policy and risks heading into next week’s ECB meeting.

Key Quotes:

“Media focus on the range of ECB options being discussed—including a two tiered deposit rate (to allow for greater cuts), broadening asset purchases to include bonds of towns and regions, as well as loans at risk of non -payment—has weighed on yields across the euro area, pushing the German 2Y yield to a fresh low under -40bpts.

The Germany-U.S. 2Y yield spread is now at a fresh low nearing –134bpts, a level not seen since 2006. Yield spreads have been, and are likely to remain, key drivers for EUR. ”

Analysts at Scotiabank explained that market participants intensify their focus on relative policy and risks heading into next week’s ECB meeting.

(Market News Provided by FXstreet)