As discussed in the USD section above, when liquidity becomes a discriminating factor in the foreign exchange market, the Euro (EUR) may find some support on the crosses. Some of that support may come from the unwinding of positions in Nordic currencies that are typically traded against the EUR. We remain alert to any pronounced underperformance of the NOK, which is often a thermometer of liquidity conditions in the foreign exchange market, says Francesco Pesole, currency strategist at ING.
Risks still inclined to the downside in the short term
“On the domestic front, we heard unusually hawkish comments from a neutral member of the Governing Council (Luis de Guindos) yesterday, which goes against the moderate trend in the ECB’s post-meeting communication. Guindos highlighted how the inflation outlook is ‘surrounded by substantial risks’, which de-emphasizes growth concerns and the risks of missing the inflation target.”
“Guindos’ comments are not enough to change the trend in the moderate revaluation along the EUR curve, and the two-year USD:EUR swap rate spread remains the widest since April, around 160bps ( 70bps wider than a month ago). That remains consistent with increased pressure on EUR/USD, and although risks now appear more balanced for the pair, they are still tilted to the downside in the near term.”
“The eurozone and ECB speaker calendar is empty today.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
