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EUR/USD: euro has got its xmas slippers on - Scotiabank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 29, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Guatemala) - Analysts at Scotiabank explained that EUR/USD spot looks to have put on its slippers, settled into a comfortable chair by the fire on December 24th and decided not to move until it is completely necessary.

    Key Quotes:

    "Limited movement over the past few sessions and today, at least so far, ignores some rather interesting developments, however. Notably, US yields have pushed higher, putting 2-year yields at 1.07% on the screens this morning."

    "Eurozone-US spreads, which were near 80bpts in mi-October, have widened out to 140bps premium for the USD this morning, the widest since early 2006 (see chart). Our fair value model, which uses spreads and relative equity performance as factor inputs, suggests EURUSD’s equilibrium level is 1.0130, putting spot about 2 standard deviations above fair value."

    "There was little in terms of European data today; Italian business confidence slipped a little in December (104.1 versus 104.6 last) while consumer confidence also eased modestly (117.6 versus 118.4)."
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