21 Jan 2015
EUR creating waves - Rabobank
FXStreet (Guatemala) - Jane Foley, Senior Currency Strategist at Rabobank noted that yesterday’s policy strike by the Danish National Bank was another piece of fall-out from last week’s decision by the SNB to walk away from the EUR/CHF 1.20 floor.
Key Quotes:
"The DNB cut interest rates to makes its currency less attractive and to protect its EUR/DKK peg in the wake of the collapse of the SNB’s currency floor."
"There is currently much debate over whether the SNB could have handled its communication better last week and this is likely to continue for some time. However, the problems that faced the SNB were not of its making."
"The SNB is neither fully responsible for creating safe haven demand for its currency, nor for the sharp weakening in the value of the EUR over the past month which made the protection of the EUR/CHF1.20 floor untenable."
"Insofar as we have been arguing that ECB policy measures have been having a significant impact in weakening the EUR, we would put the ECB at the centre of the currency war in Europe and the SNB’s EUR/CHF1.20 floor as a casualty of the ECB’s success. Dependent on how much further the EUR weakens in the coming months, further shock waves could yet be felt."
Key Quotes:
"The DNB cut interest rates to makes its currency less attractive and to protect its EUR/DKK peg in the wake of the collapse of the SNB’s currency floor."
"There is currently much debate over whether the SNB could have handled its communication better last week and this is likely to continue for some time. However, the problems that faced the SNB were not of its making."
"The SNB is neither fully responsible for creating safe haven demand for its currency, nor for the sharp weakening in the value of the EUR over the past month which made the protection of the EUR/CHF1.20 floor untenable."
"Insofar as we have been arguing that ECB policy measures have been having a significant impact in weakening the EUR, we would put the ECB at the centre of the currency war in Europe and the SNB’s EUR/CHF1.20 floor as a casualty of the ECB’s success. Dependent on how much further the EUR weakens in the coming months, further shock waves could yet be felt."