8 Dec 2014
Lower Oil prices fuelling downside risks for inflation & currencies – DBS
FXStreet (Barcelona) - According to the Team at DBS, lower oil prices are creating trouble for Eurozone and Japan for their fight against deflation, while keeping AUD and NZD under pressure.
Key Quotes
“Eurozone and Japan view lower oil prices as negative for their fight against deflation risks. Last week, the European Central Bank (ECB) postponed its decision on whether to implement quantitative easing to the first quarter of next year. Japan is scheduled to hold its snap elections this Sunday (14 Dec) which is likely to see voters staying with PM Shinzo Abe and Abenomics. USD/ JPY crossed above 120 last Friday. Attention is now on EUR/USD to hit below 1.20.”
“Lower oil and commodities are also pushing AUD and NZD lower. With the DXY (USD) index having risen back to their highs in 2009, these countries have argued that their exchange rates are too strong on a trade-weighted basis. For example, NZD has only given back a quarter of its post-2008 crisis gains.”
Key Quotes
“Eurozone and Japan view lower oil prices as negative for their fight against deflation risks. Last week, the European Central Bank (ECB) postponed its decision on whether to implement quantitative easing to the first quarter of next year. Japan is scheduled to hold its snap elections this Sunday (14 Dec) which is likely to see voters staying with PM Shinzo Abe and Abenomics. USD/ JPY crossed above 120 last Friday. Attention is now on EUR/USD to hit below 1.20.”
“Lower oil and commodities are also pushing AUD and NZD lower. With the DXY (USD) index having risen back to their highs in 2009, these countries have argued that their exchange rates are too strong on a trade-weighted basis. For example, NZD has only given back a quarter of its post-2008 crisis gains.”