As discussed in the USD share above, when liquidity becomes a discriminating component in FX, the Euro (EUR) can discover some befriend in the crosses. Piece of such befriend could simply approach from the unwinding in Nordics FX positions which are in total traded vis-as-vis the EUR. We remain on the lookout for any though-provoking underperformance of NOK, which is frequently a thermometer of FX liquidity conditions, ING’s FX strategist Francesco Pesole notes.
Risks peaceable tilted to the diagram back in the shut to term
“On the home aspect, we heard unusually hawkish-leaning comments by a neutral Governing Council member (Luis de Guindos) the outdated day – which is bucking the otherwise dovish pattern in post-assembly ECB communication. Guindos stressed out how the inflation outlook is ‘surrounded by immense risks’, which lifts some emphasis from boost concerns and risks of undershooting the inflation diagram.”
“Guindos’ comments must now not ample to flip the tide in the dovish repricing throughout the EUR curve, and the USD:EUR two-year swap rate unfold stays at the widest since April, around 160bp (70bp wider than a month ago). That stays constant with extra stress on EUR/USD, and despite risks now taking a gaze extra balanced for the pair, they are peaceable tilted to the diagram back in the shut to term.”
“The eurozone and ECB speaker’s calendar is empty presently time.”
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