10 Nov 2015
Euro: More selling pressure coming – Investec
FXStreet (Delhi) – Research Team at Investec, notes that the Reuters news service released an article claiming ECB members were forming a consensus ahead of their December meeting to cut deposit rates further into negative territory - this despite Dr Draghi's claims last year that at -0.2%, the ECB had reached its lower bound.
Key Quotes
“The news sent the Euro lower against its rivals although the gains were not sustained for long as investors likely questioned the wisdom of further taxing the already burdened European banking system by increasing charges for Banks to hold deposits with the ECB. Dr Draghi and pals continue to walk the fine line between stimulative policy and financial system burden.”
“Either way, further ECB easing should see the Euro continue to be a funding currency of choice, particularly with a potential Federal Reserve interest rate hike on the cards in the US increasing the cost of Dollar debt, meaning borrowers will likely want to switch to Euro debt to fund activities in the medium term - meaning more Euro selling pressure to come.”
Key Quotes
“The news sent the Euro lower against its rivals although the gains were not sustained for long as investors likely questioned the wisdom of further taxing the already burdened European banking system by increasing charges for Banks to hold deposits with the ECB. Dr Draghi and pals continue to walk the fine line between stimulative policy and financial system burden.”
“Either way, further ECB easing should see the Euro continue to be a funding currency of choice, particularly with a potential Federal Reserve interest rate hike on the cards in the US increasing the cost of Dollar debt, meaning borrowers will likely want to switch to Euro debt to fund activities in the medium term - meaning more Euro selling pressure to come.”