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12 Aug 2014
G10 FX reactions to euro area inflation surprises - Nomura
FXStreet (Łódź) - Nomura FX Strategists Yujiro Goto and Jordan Rochester point out that Eurozone inflation data has become increasingly important for the G10 FX market in recent months.
Key quotes
"We expect EUR to continue to trade weakly, as inflation pressure in the euro area is expected to stay subdued."
"Our analysis of FX reactions to euro area inflation surprises suggest USD and dollar bloc currencies would be the better G10 currencies to go long against EUR while euro area inflation momentum is weak."
"Fundamentally, we prefer to short EUR/USD."
"Of the European G10 currencies, GBP has the most room to appreciate against EUR, as GBP reacts very strongly to strong UK data, although it may not benefit much from weak euro area data."
"NOK and SEK can benefit from weaker European inflation and economic data, but we need to be more careful about the spillover effects of euro area disinflation."
Key quotes
"We expect EUR to continue to trade weakly, as inflation pressure in the euro area is expected to stay subdued."
"Our analysis of FX reactions to euro area inflation surprises suggest USD and dollar bloc currencies would be the better G10 currencies to go long against EUR while euro area inflation momentum is weak."
"Fundamentally, we prefer to short EUR/USD."
"Of the European G10 currencies, GBP has the most room to appreciate against EUR, as GBP reacts very strongly to strong UK data, although it may not benefit much from weak euro area data."
"NOK and SEK can benefit from weaker European inflation and economic data, but we need to be more careful about the spillover effects of euro area disinflation."