With the Italian sovereign spread widening, what are the ramifications for the euro?
Here is their view, courtesy of eFXdata:
Danske Research discusses the current market conditions and notes that t Italian sovereign spread widening may be starting to weigh on the EUR in the near-term.
“USD/JPY and EUR/USD consolidated somewhat after the significant jumps – in either direction – after the early plunge in oil and a continued equities rout. Indeed, over recent weeks, when global risk sells off, EUR/USD goes up. That said, there are first signs that Italian sovereign spread widening may be starting to weigh on the cross and we think it is ‘safe’ to say that 1.20 is not in sight,” Danske notes.
“Near term, all eyes will remain on the Fed and OPEC+. A key risk for FX markets at present is that deflation risks grab further hold – and this still tends to support JPY, CHF. And if the skies may clear eventually, USD may lost its position of strength in the interim,” Danske adds.
For lots more FX trades from major banks, sign up to eFXplus
By signing up for eFXplus via the link above, you are directly supporting Forex Crunch.
Share
