EUR/USD: Potential return to positive rates later this year to support euro – CIBC
|In the opinion of economists at CIBC Capital Markets, the pulling forward of rate hike expectations leaves the potential for rates to move back into positive territory prior to year-end, supporting the euro.
ECB remains mindful of repeating the policy mistake of 2011
“Any move back towards positive rates would not necessarily result in an immediate rush of capital. However, any marginal uptick in reserve manager EUR appetite would provide a more substantive underpinning of the currency, precluding fears over EUR/USD testing 2017 lows.”
“While real economy headwinds are growing, and we remain mindful of widening peripheral spreads, the window for policy adjustment may prove limited. Indeed, the ECB remains mindful of repeating the policy mistake of 2011. Nevertheless, a move early in H2, combined with the discussion of a potential return to positive rates, points towards EUR valuations proving to be supported in the near term, if not necessarily immediately boosted.”
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.