26 Jan 2015
ECB move might spark currency war – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Christin Tuxen assessed the chances of a re-emergence of the currency war following last week’s announcement by the ECB.
Key Quotes
“Focus in the FX market will now turn to possible reactions from other central banks to the ECB move last week, which arguably re-ignited the global currency war”.
“Although we do not expect the FOMC to make any material changes to its statement in association with this week’s meeting, any comments on worries about USD strength could mitigate the EUR/USD sell-off”.
“Also, any response to ECB from the Riksbank will take centre stage ahead of the February meeting: we think the Riksbank will merely opt to signal zero rates for an extended period of time rather than invoking other unconventional measures”.
“This should eventually support a downtrend in EUR/SEK but the risk of further Riksbank easing should hold the pair back near term”.
Key Quotes
“Focus in the FX market will now turn to possible reactions from other central banks to the ECB move last week, which arguably re-ignited the global currency war”.
“Although we do not expect the FOMC to make any material changes to its statement in association with this week’s meeting, any comments on worries about USD strength could mitigate the EUR/USD sell-off”.
“Also, any response to ECB from the Riksbank will take centre stage ahead of the February meeting: we think the Riksbank will merely opt to signal zero rates for an extended period of time rather than invoking other unconventional measures”.
“This should eventually support a downtrend in EUR/SEK but the risk of further Riksbank easing should hold the pair back near term”.