11 Jul 2013
Flash: Portuguese woes weighing on EUR/USD – Investec
FXstreet.com (New York) - They are already signs earlier today that the USD is doing its best to shrug off the overnight correction, helped by news from Portugal that pointed towards more political instability that is starting to weigh on the EUR/USD, notes Lee McDarby, Corporate Treasury at Investec
According to McDarby, “In the absence of any major news from Europe, the main driver here is likely to be market sentiment as it seems the euro is going to remain the first substitute to US dollars if the market does want to start diversifying away from the world’s leading currency. This dynamic would explain why the GBP/EUR has had a torrid evening, falling all the way back to 1.1550 weighed down by the sheer weight of euro buying overnight.”
In other news it’s interesting to note the disconnect between moves in the currency market on the back of Bernanke’s comments and the relatively calm in equities (US markets finished flat or marginally higher whilst Asian markets rallied). Emerging markets also rallied overnight as further evidence of the correction in market movements over the past few weeks.
According to McDarby, “In the absence of any major news from Europe, the main driver here is likely to be market sentiment as it seems the euro is going to remain the first substitute to US dollars if the market does want to start diversifying away from the world’s leading currency. This dynamic would explain why the GBP/EUR has had a torrid evening, falling all the way back to 1.1550 weighed down by the sheer weight of euro buying overnight.”
In other news it’s interesting to note the disconnect between moves in the currency market on the back of Bernanke’s comments and the relatively calm in equities (US markets finished flat or marginally higher whilst Asian markets rallied). Emerging markets also rallied overnight as further evidence of the correction in market movements over the past few weeks.