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11 Jun 2014
EUR extends its decline - Investec
FXStreet (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec, remarks the ongoing weakness around the EUR.
Key Quotes
"The euro’s fall from grace continued yesterday as EUR/USD tumbled further as we approach the lows we witnessed on Thursday around the option protected level of 1.3500 (the year low is 1.3477). Reports from various large banks are all reporting one way traffic as fresh euro selling against a broad range of currencies is confirming the euro as the funding currency of choice amongst global investors."
"With rates as suppressed as they are in the euro, investors are naturally inclined to borrow in euros and use these to fund purchases of higher yielding currencies. GBPEUR hit Thursday's 1.2400 high again yesterday but couldn’t quite push through."
"It certainly feels more like 'when' rather than 'if' for a break to new 2014 highs in the coming days, with this morning's UK unemployment data a potential catalyst. The unemployment rate is expected to drop again this month, down to 6.70% from 6.80% which will only pile on the pressure at the Bank of England to raise interest rates if they adopt the view this is placing a squeeze on spare capacity."
Key Quotes
"The euro’s fall from grace continued yesterday as EUR/USD tumbled further as we approach the lows we witnessed on Thursday around the option protected level of 1.3500 (the year low is 1.3477). Reports from various large banks are all reporting one way traffic as fresh euro selling against a broad range of currencies is confirming the euro as the funding currency of choice amongst global investors."
"With rates as suppressed as they are in the euro, investors are naturally inclined to borrow in euros and use these to fund purchases of higher yielding currencies. GBPEUR hit Thursday's 1.2400 high again yesterday but couldn’t quite push through."
"It certainly feels more like 'when' rather than 'if' for a break to new 2014 highs in the coming days, with this morning's UK unemployment data a potential catalyst. The unemployment rate is expected to drop again this month, down to 6.70% from 6.80% which will only pile on the pressure at the Bank of England to raise interest rates if they adopt the view this is placing a squeeze on spare capacity."