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6 May 2015
ECB expected to expand its purchases, bearish on EUR – RBS
FXStreet (Barcelona) - Brian Daingerfield, FX Trading Strategist at RBS, believes that the upcoming Eurozone data won’t deter the ECB from expanding its asset purchases further, which means downside risk exists for the EUR.
Key Quotes
“Our European rates research colleagues strongly believe the sell-off in European fixed income should be faded, particularly given our view that the pickup in near-term data is unlikely to pressure the ECB to taper its asset purchases.”
“If anything, we see the risks in favour of the ECB expanding its asset purchases, rather than ending them early. That leaves us still bearish on the EUR.”
“Importantly, while long-term European rates have surged in recent days, short-term rate spreads have not moved in favour of the EUR. In fact, the 1-year swap rate spread which closely tracked the downtrend in EUR since last May has retested the lows.”
Key Quotes
“Our European rates research colleagues strongly believe the sell-off in European fixed income should be faded, particularly given our view that the pickup in near-term data is unlikely to pressure the ECB to taper its asset purchases.”
“If anything, we see the risks in favour of the ECB expanding its asset purchases, rather than ending them early. That leaves us still bearish on the EUR.”
“Importantly, while long-term European rates have surged in recent days, short-term rate spreads have not moved in favour of the EUR. In fact, the 1-year swap rate spread which closely tracked the downtrend in EUR since last May has retested the lows.”