9 Dec 2013
Flash: EUR and JPY crosses showing morning resiliance - BMO Capital Markets
FXstreet.com (Barcelona) - Stephen Gallo, European Head of Currency Strategy at BMO Capital Markets comments that EUR resilience and resilience in the JPY crosses were really the only two discernible trends during the London morning.
Key Quotes
"EUR money market conditions at the front-end have been very tight, with year-end flows a plausible factor there. Absent the ECB’s decision to suspend LTRO repayments through December, it is possible the EUR might be even firmer."
"Simultaneously, the Nikkei strength overnight and the higher Dec-Jan implied Fed taper probabilities have kept the JPY generally offered. Looking for opportunities to sell the JPY on rallies remains a preferred trade leading into the December FOMC, particularly as net sales of foreign securities by Japanese residents seem to be stabilising."
"We are expecting a grind lower in EUR/GBP back towards 0.8350 from here as the medium-term direction in nominal swap spreads should remain biased towards GBP strength. Admittedly though, the direction of pain in the EUR/GBP trade appears to be topside."
Key Quotes
"EUR money market conditions at the front-end have been very tight, with year-end flows a plausible factor there. Absent the ECB’s decision to suspend LTRO repayments through December, it is possible the EUR might be even firmer."
"Simultaneously, the Nikkei strength overnight and the higher Dec-Jan implied Fed taper probabilities have kept the JPY generally offered. Looking for opportunities to sell the JPY on rallies remains a preferred trade leading into the December FOMC, particularly as net sales of foreign securities by Japanese residents seem to be stabilising."
"We are expecting a grind lower in EUR/GBP back towards 0.8350 from here as the medium-term direction in nominal swap spreads should remain biased towards GBP strength. Admittedly though, the direction of pain in the EUR/GBP trade appears to be topside."