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26 Jun 2013
Flash: Upcoming ECB policy decision gathers focus – ANZ
FXstreet.com (New York) - The euro has fallen against the US dollar in the aftermath of the FOMC as the dollar’s safe-haven attractions rise, suggests Brian Martin and Amber Rabinov, Economists at ANZ.
Ultimately however, the focus in the euro zone is on the European Commission summit on 27-28 June and the ECB policy decision next week. “Our core view on the euro is well known: buy and hold. However, mark to market disciplines and the rise in volatility recently means that is not necessarily appropriate for everyone. Following the FOMC press conference last week, the euro fell.” they add.
Much of the strength in the dollar is being explained by the sharp rise in US yields. That may be true, but if that is the case, why didn't it hold in the aftermath of Bernanke's testimony and Q&A session on 22 May? It is arguable that the strength in the dollar has more to do with the pronounced fall in US equities over the past week. “The dollar often benefits from safe-haven status during periods of US equity weakness, but that is not to say that higher US yields cannot now be playing a factor.”
Ultimately however, the focus in the euro zone is on the European Commission summit on 27-28 June and the ECB policy decision next week. “Our core view on the euro is well known: buy and hold. However, mark to market disciplines and the rise in volatility recently means that is not necessarily appropriate for everyone. Following the FOMC press conference last week, the euro fell.” they add.
Much of the strength in the dollar is being explained by the sharp rise in US yields. That may be true, but if that is the case, why didn't it hold in the aftermath of Bernanke's testimony and Q&A session on 22 May? It is arguable that the strength in the dollar has more to do with the pronounced fall in US equities over the past week. “The dollar often benefits from safe-haven status during periods of US equity weakness, but that is not to say that higher US yields cannot now be playing a factor.”