FX market could see heightened risk of large EUR tensions as the glue holding the EUR family together is tested, in the opinion of analysts at HSBC Group.
Key quotes
“Combination of cyclical pressures and a nation-centric political response risks exposing some of the structural frailties of the EUR project.”
“Fiscal tensions could become acutely evident in 2021 as countries are forced to rectify this year’s tolerated fiscal largesse.”
“The EUR will likely face some temporary pressure as the market prices in a discount for a higher probability of a EUR break-up amid the strains of COVID-19.”
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