Looking at a Weaker USD, Higher EUR/USD - BTMU
Analysts at Bank of Tokyo Mitsubishi explained that a weak start to the
calendar year for the US economy, the third in a row, prompted
heightened recession concerns which reinforced US dollar weakness as
well in the near-term.
Key Quotes:
"A
softening of consumer spending combined with drags to growth from net
trade, inventories and capital investment weighed heavily on growth in
Q1. The lagged impact from the sharp tightening of US financial
conditions including the stronger US dollar, the hit to the energy
sector from the lower oil price, and weakening global growth are all
providing headwinds to growth."
"In contrast, the euro-zone
economy has held up better recently particularly early this year when it
expanded by an above trend 0.6% in Q1. The recent divergence in growth
performance has likely played a role in supporting a modest
strengthening of the euro. The euro-zone economy is still benefitting
from the lagged impact from a weaker euro, easier credit conditions and
looser ECB policy. In addition, fiscal policy had already turned
expansionary last year."
