Analysts at Nomura point out that Eurozone’s March BoP data confirmed strong foreign demand for euro area bonds, even amid higher political uncertainty.
“While volatile financial markets in February caused meaningful weakness in foreign investment in euro area equities and bonds, their demand recovered swiftly. The euro area’s external balance remains robust too.”
“FDI outflows may offset these positive flow dynamics, but we expect the basic balance of the BOP to turn sustainably into a surplus, supporting EUR. EUR appreciation momentum is currently weakening, but we judge the mid-term flow picture will be more EUR supportive this year. Thus, we maintain our EUR long recommendations over the next 2-3 months.”
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