EUR: Hit by a crisis – AmpGFX

According to Greg Gibbs, Analyst at Amplifying Global FX Capital, the case for a weaker EUR is that the financial market stress in the Eurozone will cause the ECB to extend its QE and delay rate hikes.

Key Quotes

“The message received by the market is that they are looking for the exit, so it may not be as quick or as eager to extend and expand as it was a few years back.  Draghi's term ends in October.’

“Eurozone crisis has not always hurt the EUR as capital flight from the periphery went to the core, not out of the EUR. And it could be argued that if weaker periphery members pulled out, the core would be stronger.”

“Furthermore, the Eurozone has a current account surplus and does not need to attract foreign capital for stability.  The case for a weaker EUR is more generated from the economic chaos from weaker periphery bleeding to the core, forcing fiscal transfers, and monetary policy easing.”