Client support: Phone: (+357) 22314160

FX & CFD trading involves significant risk


Show news:

05.09.2016 06:36

We maintain our bullish EUR view - Morgan Stanley

"We maintain our bullish EUR view. A higher Fed rate would likely support the USD vs. currencies sensitive to front-end rate differentials. Generally, low-yielding currencies fall into this category, but even here differentiation is required. The EUR and CHF should remain supported as both regions have financial institutions with weak balance sheets and so are unable to export sufficient local-currency-denominated long-term capital to compensate for the current account surpluses. Resistance from core EMU countries to more aggressive policies that could push inflation rates higher should keep local real rates high, pushing the EUR and CHF higher against most other currencies

Fiscal policy debate in the Eurozone. The EMU is not leading the debate about policies; instead, it lags. Italy is considering more fiscal spending to deal with the devastating damage to its infrastructure caused the recent earthquake, but that is all we should expect to see. The EMU is not ready to remove the debt brakes implemented in 2009, even if fiscal stimulus could boost the economic outlook. A similar interpretation applies to the inflation target discussion. All in all, the EMU's policy approach will not be progressive enough to sufficiently boost its inflation expectations,allowing its real rate levels to fall to a level that would weaken the currency. Internally, the EMU may find it difficult to boost inflation given the slack within its labor market, its poor corporate profitability and weak financial institution balance sheets preventing credit picking up.

Exhibit 10 shows the weak banking sector share price performance, predicting weaker credit growth within the eurozone. A central-bank induced liquidity impulse will find it difficult to develop multiplying effects, but without improving credit demand inflation is unlikely moving higher. International aspects have stayed deflationary too. Commodity prices have rolled over and China's exchange rate adjusted PPI,now falling at a 7.5%Y rate, does not bode well for the G-7 core inflation outlook.

The EMU's disruptively high real rates could not only undermine fixed asset investment prospects within EMU they may also take the EUR into overvalued territory.

The EUR does not rise due to a better economic outcome within EMU. Instead it may rise due to the lack of capital exports held back by balance sheet constraints of EMU financial institutions and too high real EUR rates allowing the recycling of EMU's current account surplus at current FX levels.

For now, the EUR may punch well above its economic weight. Due to the 'exhausted' position of EMU's yield curve, there is very little the ECB can do to prevent EUR strength".

Copyright © 2016 Morgan Stanley, eFXnews

05.09.2016 07:12

WSE: After opening

Market Focus

  • The eurozone started the third quarter on a solid footing, according to PMI survey data
  • Earnings Season in U.S.: Major Reports of the Week
  • German private sector output growth slowed for the second month running in July
  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
July 2017
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
  • 2010
  • 2009
  • 2008
  • 2007
  • 2006
  • 2005
  • 2004
  • 2003
  • 2002


All posted material is a marketing communication solely for informational purposes and reliance on this may lead to loss. Past performance is not a reliable indicator of future results. Please read our full disclaimer.

To maximize our visitors browsing experience TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies. If you disagree, you may change your browser settings at any time. Read more

  • © 2011-2017 TeleTrade-DJ International Consulting Ltd

    TeleTrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

    The company operates in accordance with Markets in Financial Instruments Directive (MiFID).

  • The information on this website is for informational purposes only. All the services and information provided have been obtained from sources deemed to be reliable. TeleTrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

  • TeleTrade cooperates with SafeCharge Limited, which is an electronic money institution authorized and regulated by the Central Bank of Cyprus and is a principal member of MasterCard Europe and Visa Europe. We also cooperate with Moneybookers and Neteller, which offer electronic e-wallet services authorized and regulated by the Financial Conduct Authority.

    Please read our full Terms of Use.

  • To maximize our visitors browsing experience TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies. If you disagree, you may change your browser settings at any time. Read more

    TeleTrade-DJ International Consulting Ltd currently does not provide its services to residents or nationals of the USA, and also doesn't provide retail Forex and CFD accounts to residents or nationals of Belgium.

Connect with Us
Share on
social networks
Request a callback
Top Page