21 Aug 2013
Flash: EUR may continue to show surprising strength - RBS
FXstreet.com (Barcelona) - For the time being, as the Fed weighs the possibilities of tapering later this year, EUR may continue to show surprising strength, according to Greg Gibbs, FX Strategist at RBS.
Key Quotes
"Current account surpluses are the new black, and the Eurozone has now one of the largest and strongest surpluses (+2.5% of GDP) in the major and emerging worlds. This surplus has been achieved primarily by a massive crunch in domestic demand, including fiscal austerity, crunching imports and forcing the most productive parts of the economy to pursue export markets."
"The region has spent three of the last four years in crisis, and surprisingly to many it has lived with depression levels of unemployment. So while political and fiscal crisis remains a threat, the region has proved resilient."
"Finally the ECB has one of the tightest monetary policies, despite the most significant deflationary forces. Its has said it expects low or lower rates for an extended period, but policy hawks are not willing to tie this to any variable or time-frame. So it may be forced to purse lower rates reluctantly by a stronger EUR."
Key Quotes
"Current account surpluses are the new black, and the Eurozone has now one of the largest and strongest surpluses (+2.5% of GDP) in the major and emerging worlds. This surplus has been achieved primarily by a massive crunch in domestic demand, including fiscal austerity, crunching imports and forcing the most productive parts of the economy to pursue export markets."
"The region has spent three of the last four years in crisis, and surprisingly to many it has lived with depression levels of unemployment. So while political and fiscal crisis remains a threat, the region has proved resilient."
"Finally the ECB has one of the tightest monetary policies, despite the most significant deflationary forces. Its has said it expects low or lower rates for an extended period, but policy hawks are not willing to tie this to any variable or time-frame. So it may be forced to purse lower rates reluctantly by a stronger EUR."