25 Jul 2013
Flash: Fading EUR opportunities – BMO
FXstreet.com (London) - Stephen Gallo, Head of FX Strategy at BMO said EUR selling opportunities will rise on aggressive moves higher in Euro Area rates.
Key Quotes:
“We think sharp rises in Euro Area rates will lead to EUR selling opportunities across currency pairs, especially if those rate rises are induced by bond market volatility.”
“Given Euro Area growth remains vulnerable to downside, the degree of plausible “bad outcomes” for a number of countries within the bloc will be magnified if rates continue to rise”.
“The EUR is still not “out of the woods yet” in terms of being able to attract “yield-seeking” capital flows related to a rising rate advantage”.
“ A number of major economies will remain vulnerable if rates rise sharply in the quarters ahead, but we believe that the Euro Area currently has one of the lower thresholds for pain in this regard”.
“ Despite its size and liquidity persistent vulnerabilities in a number of Euro Area economies will bestow some of the properties of a developing market currency on the EUR if rates move up aggressively”.
“ Elevated levels of political uncertainty should also act to cap EUR gains”.
Key Quotes:
“We think sharp rises in Euro Area rates will lead to EUR selling opportunities across currency pairs, especially if those rate rises are induced by bond market volatility.”
“Given Euro Area growth remains vulnerable to downside, the degree of plausible “bad outcomes” for a number of countries within the bloc will be magnified if rates continue to rise”.
“The EUR is still not “out of the woods yet” in terms of being able to attract “yield-seeking” capital flows related to a rising rate advantage”.
“ A number of major economies will remain vulnerable if rates rise sharply in the quarters ahead, but we believe that the Euro Area currently has one of the lower thresholds for pain in this regard”.
“ Despite its size and liquidity persistent vulnerabilities in a number of Euro Area economies will bestow some of the properties of a developing market currency on the EUR if rates move up aggressively”.
“ Elevated levels of political uncertainty should also act to cap EUR gains”.