Temporary considerations over a European pullback from US belongings pale rapidly, with markets exhibiting little follow-through regardless of Davos-driven hopes of geopolitical easing, ING’s FX analyst Francesco Pesole notes.
EUR/USD seen under 1.170 regardless of Davos optimism
“A headline about Danish pension fund AkademinerPension exiting US Treasuries yesterday briefly fuelled further considerations a few European exodus from US belongings, regardless of the precise measurement of the fund’s holdings being very small in December ($100m). Markets aren’t following by means of on these considerations this morning, and if Davos brings some geopolitical de-escalation, the related EUR good points could begin to be trimmed at the moment.”
“Our view is that except bond volatility spikes once more – not our baseline – EUR/USD belongs under 1.170 in a seasonally robust interval for USD and in mild of the current hawkish repricing of front-end USD yields.”
“In the remainder of Europe, we’re additionally cautious of chasing the rally in SEK a lot additional for now. EUR/SEK is buying and selling at over 2% short-term undervaluation and could also be attributable to an upward correction – we consider to 10.80 – earlier than re-establishing a medium-term depreciation development.”
