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12 Jul 2013
Flash: EUR/USD to drift lower again - Societe Generale
FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale believes that EUR/USD is set to drift lower again.
He begins by noting his surprise that markets haven't been able to brush off the effect of Portugal's political crisis. He writes, “I didn't (don’t) think this will be anything more than a temporary block to peripheral spreads re-tightening (along with corporate bond spreads) even though the big structural problem remains.” He sees that Southern Europe is tackling real currency misalignment with deflation, which is making their debt position even less sustainable. Europe’s rates markets can edge slowly back down as they price in “lower for even longer than the US”. He writes, “When they do, EUR/USD will drift lower again.”
He begins by noting his surprise that markets haven't been able to brush off the effect of Portugal's political crisis. He writes, “I didn't (don’t) think this will be anything more than a temporary block to peripheral spreads re-tightening (along with corporate bond spreads) even though the big structural problem remains.” He sees that Southern Europe is tackling real currency misalignment with deflation, which is making their debt position even less sustainable. Europe’s rates markets can edge slowly back down as they price in “lower for even longer than the US”. He writes, “When they do, EUR/USD will drift lower again.”