Little Chance of EUR/USD Falling Significantly - SocGen
Kit Juckes, Research Analyst at Societe Generale, suggests that the Euro
remains very range bound and it still by and large tracks the
Bund/Treasury spread, albeit trading a little higher than that spread
would imply at the moment.
Key Quotes
“That
raises the question of whether it’s getting support from higher oil
prices and indeed, whether further gains ahead of (or after) the Doha
producers’ meting could break the current EUR/USD range. There’s a
positive correlation, but not one to get too excited about.
I
can get a small improvement in explaining EUR/USD moves by adding oil to
the Bund/Treasury correlation, but I need big oil price shifts to make
much difference. Oil finding a base, is not the same as oil embarking on
a major rally. When I add oil prices, I still don’t manage to ‘explain’
why EUR/USD is as high as it is. That leaves me reluctant to chase
EUR/USD even if oil prices do continue to edge higher. It doesn’t
however, change a conclusion that as long as the Fed is super-dovish,
and as long as yield spreads are range-bound, there is little chance of
EUR/USD falling significantly or, of the dollar generally catching a
bid.”