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14 May 2014
EUR/USD potential for further downside - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, expects the EUR/USD to decline further in the upcoming periods.
Key Quotes
"The Euro is breaking lower as markets price in ECB action in June. The Wall St Journal tells us that the Bundesbank would sign off on aggressive action if they saw a cut in the ECB's inflation forecasts."
"Michala Marcussen wrote about this on Sunday. It is easy to imagine a small fall in the 2016 HICP forecast to, say 1 5% from 1.7%."
"That might be good enough for a cut in the Refi and Deposit rates, taking the latter below zero. But QE needs medium-term inflation forecasts to be a good bit lower, probably below 1%."
"That is much less likely. The FX market is set to price in more than a mere rate cut."
"We could see EUR/USD closer to 1.35. But I doubt we can stay there through the summer as asset prices rally and capital flows into European equities."
Key Quotes
"The Euro is breaking lower as markets price in ECB action in June. The Wall St Journal tells us that the Bundesbank would sign off on aggressive action if they saw a cut in the ECB's inflation forecasts."
"Michala Marcussen wrote about this on Sunday. It is easy to imagine a small fall in the 2016 HICP forecast to, say 1 5% from 1.7%."
"That might be good enough for a cut in the Refi and Deposit rates, taking the latter below zero. But QE needs medium-term inflation forecasts to be a good bit lower, probably below 1%."
"That is much less likely. The FX market is set to price in more than a mere rate cut."
"We could see EUR/USD closer to 1.35. But I doubt we can stay there through the summer as asset prices rally and capital flows into European equities."