”Financial markets look quite comfortable in pricing 150bp of easing for both the Fed and the ECB into next summer. Seemingly EUR/USD does not need to move too far from current levels. Yet the US election of 5 November will have a major say in the dollar’s direction, depending on who wins the presidency and what the make-up of Congress looks like. As the Federal Reserve notes in its September FOMC minutes, interest rate differentials have been a big driver of the dollar. Two-year EUR: USD swap differentials narrowed from 160bp to 85bp between April and September this year – carrying EUR/USD to 1.12. The spike in oil prices and then the strong September US jobs report have now sent those differentials back to 130bp.” Læs hele analysen her
Morten W. Langer