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23 Apr 2014
ECB and Fed would determine the direction in EUR/USD – Danske Bank
FXStreet (Edinburgh) - Pernille Nielsen, Analyst at Danske Bank, sees the divergence in the policies from the ECB and the Fed as the main catalysts for the EUR’s price action.
Key Quotes
“Following a fairly strong recovery of US data over the past weeks, the FOMC meeting next week will probably not provide any new information and the Fed will likely continue its tapering path”.
“While this admittedly brings us a small step closer to a rate hike in the US, it seems to be too early for markets to price in further hikes”.
“In respect of the ECB, the latest comments from various ECB members suggest that some ECB easing could be in the pipeline as the central bank seems to be concerned about deflation and the deflationary impact of the currency”.
“However, given the current pricing in the European money market we probably have to see actual ECB easing in order for the curve to flatten further and the euro to weaken”.
Key Quotes
“Following a fairly strong recovery of US data over the past weeks, the FOMC meeting next week will probably not provide any new information and the Fed will likely continue its tapering path”.
“While this admittedly brings us a small step closer to a rate hike in the US, it seems to be too early for markets to price in further hikes”.
“In respect of the ECB, the latest comments from various ECB members suggest that some ECB easing could be in the pipeline as the central bank seems to be concerned about deflation and the deflationary impact of the currency”.
“However, given the current pricing in the European money market we probably have to see actual ECB easing in order for the curve to flatten further and the euro to weaken”.