Ricardo Evangelista, Head of International Desk at ActivTrades, joined today’s Tip TV Finance Show along with Zak Mir, Technical Analyst at Zak’s Traders Cafe, and Bill Hubard, Chief Economist at Bullion Capital, to discuss the euro – dollar divergence trade, and the outlook for the Fed and ECB.
Divergence between Euro and Dollar
Evangelista mentions that the central bank policies along with the underlying economies is the reason behind the divergence between the euro and the dollar. Jumping on the Fed rate scenario, he notes that the FOMC Minutes clearly point for a rate hike for the first time in 10 years, but at a slower pace.
Will ECB be less dovish now?
When questioned by Hubard if the ECB will be less dovish after the Fed rate hike bets firmed, Evangelista noted that the circumstances of the major economies in Eurozone aren’t as positive and the ECB has failed to take action quickly, when compared to the US who adopted stimulus quite early. Thus, he doesn’t feel that the ECB will be any less dovish in December.
EUR/USD: Walking towards parity
Evangelista sees EUR/USD parity a slow walk into 2016. He feels that ECB adopting stronger policies in terms of easing and the Fed raising rates will see many investors shift from euro to the dollar.
While this divergence looks to be an easy trade, he also warns of big hits to the short EUR trade if the Fed postpones the rate hike from December to 2016.
We are not authorised by the Financial Conduct Authority of England and Wales. The information and/or data on this website is provided by us and any data providers which may be used by us for your general information and use only and is not intended for trading purposes or to address your particular financial or other requirements. In particular, the information and/or data on the website:
(1) does not constitute any form of advice (financial, investment, tax, medical, legal, spread -betting or otherwise); and (2) does not constitute any inducement, invitation or recommendation relating to any of the products listed or referred to; and (3) is not intended to be relied upon by you in making (or refraining to make) any specific investment, placing any bet or making any other decision; and (4) has not been issued or approved by Tip TV for the purposes of section 21 of the Financial Services and Markets Act 2000 (as amended from time to time).
Opinions expressed by speakers in the videos, writers of the blogs are only opinions and not expert advice. These opinions do not necessarily agree with those held by Tip TV, its directors, agents or employees who disclaim any intent to make betting, securities or securities markets recommendations. The value of investments and the income derived from them may fall as well as rise. APPROPRIATE EXPERT INDEPENDENT ADVICE SHOULD BE OBTAINED BEFORE MAKING ANY INVESTMENT, PLACING ANY BET OR MAKING ANY OTHER DECISIONS.
Recommended Content
Editors’ Picks
EUR/USD rises toward 1.0800 on USD weakness
EUR/USD trades in positive territory above 1.0750 in the second half of the day on Monday. The US Dollar struggles to find demand as investors reassess the Fed's rate outlook following Friday's disappointing labor market data.
GBP/USD closes in on 1.2600 as risk mood improves
Following Friday's volatile action, GBP/USD pushes higher toward 1.2600 on Monday. Soft April jobs report from the US and the improvement seen in risk mood make it difficult for the US Dollar to gather strength.
Gold holds on to modest gains around $2,320
Gold trades decisively higher on the day above $2,320 in the American session. Retreating US Treasury bond yields after weaker-than-expected US employment data and escalating geopolitical tensions help XAU/USD stretch higher.
Addressing the crypto investor dilemma: To invest or not? Premium
Bitcoin price trades around $63,000 with no directional bias. The consolidation has pushed crypto investors into a state of uncertainty. Investors can expect a bullish directional bias above $70,000 and a bearish one below $50,000.
Three fundamentals for the week: Two central bank decisions and one sensitive US Premium
The Reserve Bank of Australia is set to strike a more hawkish tone, reversing its dovish shift. Policymakers at the Bank of England may open the door to a rate cut in June.