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20 Aug 2015
EUR/USD: fed could hold off raising rates - BTMU
FXStreet (Guatemala) - Analysts at The Bank of Tokyo mitsubishi UFJ explained that the euro continues to remain relatively stable against the US dollar amidst the accelerated sell-off in emerging market and commodity-related currencies.
Key Quotes:
"The more risk-averse trading conditions are providing support for the euro given its role as a funding currency and the euro-zone’s healthy current account surplus. However, one offset will likely be the need of emerging market FX reserve holders to rebalance portfolios by selling euros after intervening to support domestic currencies."
"The ECB will be wary of the risk that the trade-weighted euro could potentially strengthen more materially which would increase downside risks to their outlook for inflation alongside lower commodity prices, and stands ready to act to ease policy further if required."
"The US dollar is continuing to strengthen more broadly although remains more stable against the euro."
"The strengthening US dollar and lower commodity prices may prompt the Fed to wait a little longer before raising rates this year weighing modestly on the US dollar in the near-term. More gradual Fed tightening expectations are weighing only modestly on the US dollar as negative developments overseas primarily act to increase its relative appeal."
Key Quotes:
"The more risk-averse trading conditions are providing support for the euro given its role as a funding currency and the euro-zone’s healthy current account surplus. However, one offset will likely be the need of emerging market FX reserve holders to rebalance portfolios by selling euros after intervening to support domestic currencies."
"The ECB will be wary of the risk that the trade-weighted euro could potentially strengthen more materially which would increase downside risks to their outlook for inflation alongside lower commodity prices, and stands ready to act to ease policy further if required."
"The US dollar is continuing to strengthen more broadly although remains more stable against the euro."
"The strengthening US dollar and lower commodity prices may prompt the Fed to wait a little longer before raising rates this year weighing modestly on the US dollar in the near-term. More gradual Fed tightening expectations are weighing only modestly on the US dollar as negative developments overseas primarily act to increase its relative appeal."