22 Jan 2015
Expect EMFX outperformance after the ECB announcement – TDS
FXStreet (Barcelona) - According to the TD Securities, the buying announcement from the ECB should support EMFX and FX moves and lead EUR to weaken across the board.
Key Quotes
“The European session kicked off quietly today, as the market is anxiously waiting for the ECB announcement over QE.”
“EURUSD moderately stronger on the day and following another relatively positive session yesterday. But we continue to expect the ECB to meet or exceed market expectations (and the ‘leaks’ yesterday about ECB buying €50bn per month for at least a year seems to go in this direction), which continues to support our view that in spite of high expectations, we expect to see EUR weakness across the board starting later today, including EMFX outperformance, especially given rates will be able to more clearly trade the announcement today and support the FX moves but have been unable to in recent days as positions are squared until modalities of duration and composition of buying is announced.”
“We would be biased to some selloff in bunds today which should generally support 5s10s steepening and 10s30s flattening if our expectation of ECB buying across the curve and across Eurozone countries is confirmed, but this may prove highly erratic today.”
Key Quotes
“The European session kicked off quietly today, as the market is anxiously waiting for the ECB announcement over QE.”
“EURUSD moderately stronger on the day and following another relatively positive session yesterday. But we continue to expect the ECB to meet or exceed market expectations (and the ‘leaks’ yesterday about ECB buying €50bn per month for at least a year seems to go in this direction), which continues to support our view that in spite of high expectations, we expect to see EUR weakness across the board starting later today, including EMFX outperformance, especially given rates will be able to more clearly trade the announcement today and support the FX moves but have been unable to in recent days as positions are squared until modalities of duration and composition of buying is announced.”
“We would be biased to some selloff in bunds today which should generally support 5s10s steepening and 10s30s flattening if our expectation of ECB buying across the curve and across Eurozone countries is confirmed, but this may prove highly erratic today.”