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FXstreet.com (Barcelona) - Investec Chief Economist Philip Shaw believes that the change in the Fed’s timetable has given encouragement to raise his Euro forecasts, expecting the single currency to be trading at 1.3200 by the end of 2013 and 1.2500 at the end of 2014.

Key Quotes

Angela Merkel's victory in the recent Bundestag elections may well lead to a ‘Grand Coalition’ with the SPD, but the precedent from 2005 is that it may be several weeks before this is settled. But this should pave the way for the franker discussion on various Euro area matters, including that of a third Greek bailout.”

“Surely evidence suggests that the fragile Eurozone recovery continues. This should remove the pressure for another cut in the ECB refi rate of 0.5%, but senior Governing Council members have talked about addressing the steepening yield curve by providing more liquidity, perhaps by another LTRO.”

“We wonder whether this might not be better addressed by a BoE Funding for Lending Scheme type facility.”
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