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4 Jun 2014
EUR downside would be limited - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, believes the potential downside in the single currency is limited.
Key Quotes
"The EUR/USD rate remains stuck in a tight range, trading just above the 1.3600 level ahead of the key monetary policy announcement tomorrow. The German inflation data on Monday and the euro-zone inflation data yesterday offered the latest evidence that the ECB’s projections for inflation will be missed."
"Most worrying is the German data – taking the m/m change (not the index as May not released yet), the average m/m change over the last nine months is -0.1%. That suggests the annual rate of 0.6% may drift further lower still over the coming months. Certainly the 1.0% inflation projection for this year is too high."
"On a brighter note for the ECB, the unemployment rate drop to 11.7% yesterday suggests the ECB will revise this lower tomorrow as well. We won’t repeat our ECB calls here, but will repeat that the bar is high for the ECB to match or surpass the very high expectations in the market, suggesting limited downside scope for EUR."
Key Quotes
"The EUR/USD rate remains stuck in a tight range, trading just above the 1.3600 level ahead of the key monetary policy announcement tomorrow. The German inflation data on Monday and the euro-zone inflation data yesterday offered the latest evidence that the ECB’s projections for inflation will be missed."
"Most worrying is the German data – taking the m/m change (not the index as May not released yet), the average m/m change over the last nine months is -0.1%. That suggests the annual rate of 0.6% may drift further lower still over the coming months. Certainly the 1.0% inflation projection for this year is too high."
"On a brighter note for the ECB, the unemployment rate drop to 11.7% yesterday suggests the ECB will revise this lower tomorrow as well. We won’t repeat our ECB calls here, but will repeat that the bar is high for the ECB to match or surpass the very high expectations in the market, suggesting limited downside scope for EUR."