26 Mar 2014
EUR to move lower - Societe Generale
FXStreet (Guatemala) - Kit Juckes, Global Head of Currency Strategy at Societe Generale explained that he suspects that the ECB can drive 2-year rates back to 0.35%, driving the EUR down by 1%.
Key Quotes:
“The ECB can drive 2-year rates back to 0.35%, driving the EUR down by 1% which is where US 2-year swap rates were before tapering was suggested last year, but that would only drive a fair value EUR/USD rate down by 1%”.
“On the other hand, I suspect that any boost to QE might extend the risk rally in Europe, helping peripheral spreads and equities, Which is Euro-positive.
“My core view is still that EUR/USD will start to move meaningfully lower when, but only when the US rates market starts to price in Fed hikes. That can happen in Q4 of this year, but not much earlier.
“We continue to test the upside of a range, and risk flushing out remaining EUR/USD bears and range-traders."
Key Quotes:
“The ECB can drive 2-year rates back to 0.35%, driving the EUR down by 1% which is where US 2-year swap rates were before tapering was suggested last year, but that would only drive a fair value EUR/USD rate down by 1%”.
“On the other hand, I suspect that any boost to QE might extend the risk rally in Europe, helping peripheral spreads and equities, Which is Euro-positive.
“My core view is still that EUR/USD will start to move meaningfully lower when, but only when the US rates market starts to price in Fed hikes. That can happen in Q4 of this year, but not much earlier.
“We continue to test the upside of a range, and risk flushing out remaining EUR/USD bears and range-traders."