EUR/USD looks to US politics – Danske Bank

In opinion of Arne Rasmussen, Head of FI Research at Danske Bank, headlines from the US political scenario remain a source of volatility for the pair.

Key Quotes

“The addition of Randal Quarles to the Fed board of governors with responsibility for financial regulation could potentially lead to an easing of USD liquidity and narrowing of EURUSD CCS if he manages significant easing of, e.g. capital and liquidity requirements on US banks”.

“However, our base assumption remains that we are unlikely to see financial regulatory changes in the US that would leave a significant mark on market for EUR/USD. In addition, the passing of budget resolution by the House yesterday is only a first small step towards a solution on the budget and debt ceiling and does not change our short-term outlook for USD liquidity and EURUSD CCS”.