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20 Feb 2014
Flash: EUR correlated with risk aversion? - Societe Generale
FXStreet (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale, observes the risk-of sentiment would not be punishing the EUR anymore.
Key Quotes
"What risk-off is no longer doing, is hurting the Euro. The correlation between wider risk measures and the currency has flipped, and it will look like a safe-haven currency until risk aversion is reflected in peripheral spreads."
"This morning's highlight is the PMI data, which have started badly with another weak French showing (composite 47.6 from 48.9). The European economy is trundling along, too slowly to get unemployment or budget deficits down fast enough or to escape its debt trap, but fast enough to keep the ECB on hold and EUR/USD in the upper end of its 1.34-1.38 range".
"Meanwhile, the Euro will be supported by risk aversion relative to the higher-beta European FX currencies."
Key Quotes
"What risk-off is no longer doing, is hurting the Euro. The correlation between wider risk measures and the currency has flipped, and it will look like a safe-haven currency until risk aversion is reflected in peripheral spreads."
"This morning's highlight is the PMI data, which have started badly with another weak French showing (composite 47.6 from 48.9). The European economy is trundling along, too slowly to get unemployment or budget deficits down fast enough or to escape its debt trap, but fast enough to keep the ECB on hold and EUR/USD in the upper end of its 1.34-1.38 range".
"Meanwhile, the Euro will be supported by risk aversion relative to the higher-beta European FX currencies."