28 Jun 2013
Flash: EUR/USD rebounds on Fed chatter - Danske Bank
FXstreet.com (London) - Danske Bank analysts note that it is happy days again in risk markets and a EUR/USD rebound as Fed speakers were keen to stress that the ‘Bernanke put’ remains in place: no QE exit if data fail to improve.
They see that the next focal point for EUR crosses will be the ECB meeting next week. They feel that markets are unlikely to see anything but verbal intervention to stem the recent rises in yields from Draghi. However, they add that should Frankfurt introduce more explicit forward guidance than the vague commitment that an ECB exit remains ‘distant’, the single currency could be in for a hard time as the medium-term divergence in relative monetary policy would be clearly spelled out. They write, “Today Fed's Williams (dove) could lead EUR/USD to recovery if he adds further to recent retreats on Fed tapering.”
They see that the next focal point for EUR crosses will be the ECB meeting next week. They feel that markets are unlikely to see anything but verbal intervention to stem the recent rises in yields from Draghi. However, they add that should Frankfurt introduce more explicit forward guidance than the vague commitment that an ECB exit remains ‘distant’, the single currency could be in for a hard time as the medium-term divergence in relative monetary policy would be clearly spelled out. They write, “Today Fed's Williams (dove) could lead EUR/USD to recovery if he adds further to recent retreats on Fed tapering.”