5 Mar 2015
EUR/USD decline is far from over – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Lars Christensen expects the negative tone in the pair to extend in the upcoming months.
Key Quotes
“The EUR is falling like a stone, particularly against the USD. We think this move has further legs”.
“It appears that rising FX hedge ratios from real money investors into EUR assets are driving this latest move”.
“When European equities rise, real money investors have to sell more EUR to maintain an unchanged FX hedge ratio”.
“This combined with increased lending abroad from European banks resembles what we have seen in Japan in recent years”.
“In our view, the EUR/USD downtrend should continue as long as the market has yet to re-price the Fed and the euro area is still in deflation”.
Key Quotes
“The EUR is falling like a stone, particularly against the USD. We think this move has further legs”.
“It appears that rising FX hedge ratios from real money investors into EUR assets are driving this latest move”.
“When European equities rise, real money investors have to sell more EUR to maintain an unchanged FX hedge ratio”.
“This combined with increased lending abroad from European banks resembles what we have seen in Japan in recent years”.
“In our view, the EUR/USD downtrend should continue as long as the market has yet to re-price the Fed and the euro area is still in deflation”.