1 Jul 2015
EUR/USD still seen at 1.06 by year-end – Rabobank
FXStreet (Edinburgh) - According to Jane Foley, Senior Currency Strategist at Rabobank, the pair could be headed towards the 1.06 area in the last months of 2015.
Key Quotes
“Despite countless permutations of uncertainties in Greece, the EUR has been the second best performing major currency since the start of this week”.
“We have been arguing that the EUR has been displaying quasi safe haven properties recently stemming from the Eurozone’s large current account surplus and from the pressure on bond yields in the region at the start of this year on the back of the ECB’s QE programme”.
“QE has the effect of forcing investors into higher yielding assets and the downside pressure on the EUR at the start of the years suggests that the EUR was used to fund riskier positions overseas. The recent rise in risk aversion appears to have caused some reversal of this trend”.
“It follows that if there is any good news for Greece in the coming weeks that the market may revert back to watching fundamentals”.
“Based on interest rate differentials we would expect EUR/USD to move lower during the second half of this year. How far the USD can strengthen in the coming month continues to be a function of expectations regarding US Fed policy decisions”.
Key Quotes
“Despite countless permutations of uncertainties in Greece, the EUR has been the second best performing major currency since the start of this week”.
“We have been arguing that the EUR has been displaying quasi safe haven properties recently stemming from the Eurozone’s large current account surplus and from the pressure on bond yields in the region at the start of this year on the back of the ECB’s QE programme”.
“QE has the effect of forcing investors into higher yielding assets and the downside pressure on the EUR at the start of the years suggests that the EUR was used to fund riskier positions overseas. The recent rise in risk aversion appears to have caused some reversal of this trend”.
“It follows that if there is any good news for Greece in the coming weeks that the market may revert back to watching fundamentals”.
“Based on interest rate differentials we would expect EUR/USD to move lower during the second half of this year. How far the USD can strengthen in the coming month continues to be a function of expectations regarding US Fed policy decisions”.