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26 Jun 2013
Flash: EUR/USD faces headwinds – UBS
FXstreet.com (New York) - Foreign equity investors focused on the positives after last week's FOMC press conference, suggests Gareth Berry, a Research Analyst at UBS.
Yes, Fed Chairman Bernanke did lay out a tentative timetable for QE3 tapering, but the prospect of declining liquidity injections did not scare away the inflows. Instead, foreigners were better buyers of US stocks to the tune of $0.7 bn. According to Berry, “Eurozone equities bore the brunt of the outflows though, supporting our view that trans-Atlantic growth differentials will likely weigh on the EUR/USD eventually.”
Norwegian repatriation hit a 7-year high. We presume local investors saw an opportunity to trim overseas holdings after NOK weakened to multi-year lows on the back of a dovish Norges bank policy meeting. Repatriation into Australia meanwhile has ended. The AUD/USD weakness triggered robust repatriation flows the week before, but these have now run their course.
Yes, Fed Chairman Bernanke did lay out a tentative timetable for QE3 tapering, but the prospect of declining liquidity injections did not scare away the inflows. Instead, foreigners were better buyers of US stocks to the tune of $0.7 bn. According to Berry, “Eurozone equities bore the brunt of the outflows though, supporting our view that trans-Atlantic growth differentials will likely weigh on the EUR/USD eventually.”
Norwegian repatriation hit a 7-year high. We presume local investors saw an opportunity to trim overseas holdings after NOK weakened to multi-year lows on the back of a dovish Norges bank policy meeting. Repatriation into Australia meanwhile has ended. The AUD/USD weakness triggered robust repatriation flows the week before, but these have now run their course.