EUR: Markets shrug off fears of European exit from US assets – ING
|Brief concerns over a European pullback from US assets faded quickly, with markets showing little follow-through despite Davos-driven hopes of geopolitical easing, ING's FX analyst Francesco Pesole notes.
EUR/USD seen below 1.170 despite Davos optimism
"A headline about Danish pension fund AkademinerPension exiting US Treasuries yesterday briefly fuelled extra concerns about a European exodus from US assets, despite the actual size of the fund’s holdings being very small in December ($100m). Markets aren’t following through on these concerns this morning, and if Davos brings some geopolitical de-escalation, the associated EUR gains may start to be trimmed today."
"Our view is that unless bond volatility spikes again – not our baseline – EUR/USD belongs below 1.170 in a seasonally strong period for USD and in light of the recent hawkish repricing of front-end USD yields."
"In the rest of Europe, we are also wary of chasing the rally in SEK much further for now. EUR/SEK is trading at over 2% short-term undervaluation and may be due to an upward correction – we believe to 10.80 – before re-establishing a medium-term depreciation trend."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.