29 Nov 2013
Flash: EUR/USD: environment seems positive - Commerzbank
FXstreet.com (Córdoba) - So far EUR/USD has not been much affected by speculation regarding a renewed ECB rate cut while structural difficulties in the euro zone are not being taken into consideration either, according to Lutz Karpowitz, analyst at Commerzbank.
Key Quotes
"The possibility of a further ECB rate cut had not really caused much suffering for the EUR even prior to the publication of the price data".
"Even though ECB officials had repeatedly considered such a step possible, the FX markets seem to be aware of the fact that a central banker cannot exactly answer a question of that nature in the negative, regardless of how likely such a step actually is".
"From our point of view it would be much worse for the euro if the ECB were to begin purchasing bonds (Quantitative Easing, QE) rather than cutting rates. This step would be difficult to justify under the ECB mandate and would entail considerable potential for conflicts within the euro zone".
"Overall the environment for the euro seems positive nonetheless. Structural difficulties in the euro zone have not had an effect on the FX markets for some time. A German coalition agreement that reduces German competitiveness is met by positive reactions just like a risk-free rating of European bonds in the bank test".
"Anything that avoids conflict or disturbance is currently met by EUR purchases on the FX market".
Key Quotes
"The possibility of a further ECB rate cut had not really caused much suffering for the EUR even prior to the publication of the price data".
"Even though ECB officials had repeatedly considered such a step possible, the FX markets seem to be aware of the fact that a central banker cannot exactly answer a question of that nature in the negative, regardless of how likely such a step actually is".
"From our point of view it would be much worse for the euro if the ECB were to begin purchasing bonds (Quantitative Easing, QE) rather than cutting rates. This step would be difficult to justify under the ECB mandate and would entail considerable potential for conflicts within the euro zone".
"Overall the environment for the euro seems positive nonetheless. Structural difficulties in the euro zone have not had an effect on the FX markets for some time. A German coalition agreement that reduces German competitiveness is met by positive reactions just like a risk-free rating of European bonds in the bank test".
"Anything that avoids conflict or disturbance is currently met by EUR purchases on the FX market".