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8 Apr 2013
Forex Flash: Euro initially reclaims 1.3000 post NFP´s and Cyprus - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the Euro initially climbed back above the 1.30-level following the weaker than expected US employment report erasing its modest decline driven mainly by recent developments in Cyprus.
So far, he feels that evidence of broader contagion to the rest of the Eurozone from the developments in Cyprus in the nearterm have been limited, helping to support the single currency. He writes, “Government bond yields in Italy and Spain have fallen alongside yields in most other major economies following the BoJ’s recent policy announcement as the additional global liquidity is expected to reinforce investors’ search for yield.” However, he feels that further EUR upside potential in the near term is likely to be dampened by building expectations of additional monetary easing from the ECB. He sees that at last week’s ECB meeting President Draghi gave the strongest signal yet that they stand ready to act and will watch incoming economic data closely. Hardman finishes by writing, “The ECB appears mainly concerned by and is assessing ways to help ease credit conditions for the private sectors in fiscally challenged members. A rate cut will likely only help at the margin. Weak economic conditions outside of the US continue to help ease the negative impact of the Fed’s ongoing QE3 programme upon the US dollar.”
So far, he feels that evidence of broader contagion to the rest of the Eurozone from the developments in Cyprus in the nearterm have been limited, helping to support the single currency. He writes, “Government bond yields in Italy and Spain have fallen alongside yields in most other major economies following the BoJ’s recent policy announcement as the additional global liquidity is expected to reinforce investors’ search for yield.” However, he feels that further EUR upside potential in the near term is likely to be dampened by building expectations of additional monetary easing from the ECB. He sees that at last week’s ECB meeting President Draghi gave the strongest signal yet that they stand ready to act and will watch incoming economic data closely. Hardman finishes by writing, “The ECB appears mainly concerned by and is assessing ways to help ease credit conditions for the private sectors in fiscally challenged members. A rate cut will likely only help at the margin. Weak economic conditions outside of the US continue to help ease the negative impact of the Fed’s ongoing QE3 programme upon the US dollar.”