FXStreet (Edinburgh) – Senior Currency Strategist at Rabobank Jane Foley sees the bearish trend around the euro accelerating in H2 2015.
Key Quotes
“Events of the last few weeks have brought Greece close to the brink of leaving EMU, yet the EUR has remained remarkably resilient”.
“Given that the probability of a Grexit has risen in recent weeks and that such an event has the capacity to undermine the coherence of EMU, the EUR’s resilience appears at first take counterintuitive”.
“That said, the Eurozone has a large current account surplus and investors’ decisions this year have been impacted by the ECB’s asset purchases programme”.
“As a consequence of the downside pressure on eurozone bond yields caused by QE, in the early months of this year investors appeared to shift into higher risk assets which included both EUR denominated equities in addition to higher yielding assets outside the region”.
“The recovery in Bund yields in April partly on the back of the German reflation trade had already lend the EUR some support, but the rise in risk aversion triggered by Greek events has further underpinned the EUR”.
“If Greek woes were to lessen allowing risk appetite to increase we would expect the EUR to push lower during H2 and for the USD to find support ahead of an anticipated Fed rate hike in December”.
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