17 Jul 2014
Central bank moves central to currency fortunes in low volatility environment - HSBC
FXStreet (Łódź) - Robert Lynch, FX Strategist at HSBC Securities suggests that in a persistent low volatility environment, the FX market’s fixation with monetary policy direction is likely to remain central to currency fortunes.
Key quotes
"Given our expectations of further downside surprises on inflation over the remainder of this year, and an associated asset buying programme by the ECB either late this year or early 2015, we would favour selling the EUR."
"On the flipside, the market would likely favour the GBP and USD on the basis that their central bank’s decision is about when to tighten and by how much, rather than when to loosen and by how much."
"A degree of market scepticism about whether the ECB will ultimately deliver QE means it is hard to argue such action is already in the price."
Key quotes
"Given our expectations of further downside surprises on inflation over the remainder of this year, and an associated asset buying programme by the ECB either late this year or early 2015, we would favour selling the EUR."
"On the flipside, the market would likely favour the GBP and USD on the basis that their central bank’s decision is about when to tighten and by how much, rather than when to loosen and by how much."
"A degree of market scepticism about whether the ECB will ultimately deliver QE means it is hard to argue such action is already in the price."