”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
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