Forex Flash: BoE and ECB on hold but Spanish bonds drive risk on – Societe Generale
FXstreet.com (Barcelona) - Societe Generale strategists Kit Juckes, Sébastien Galy and Olivier Korber note that we are fast approaching today's ECB press conference and that the market has already given Mr Draghi a vote of confidence, taking Spanish yields sharply lower after this morning's supply.
They write, "Desperate for yield, investors are piling into Spanish debt and the whole market is patting itself on the back the performance of spreads shows the Euro-crisis is over. Europe has a current account surplus, super-low bond yields, and a strengthening currency. Japanification advances apace. It is surely far too early for Mr Draghi to make any effort to stop the Euro's recovery, so (we) expect his comments to be well received and to add fuel to the risk-on fire."
They see that EURUSD is on its way to 1.33, GBPUSD has bounced off 1.60 yet again, and will meander higher while the US sees only jobless claims and a 30year Bond auction but will probably see more equity-buying.
They write, "Desperate for yield, investors are piling into Spanish debt and the whole market is patting itself on the back the performance of spreads shows the Euro-crisis is over. Europe has a current account surplus, super-low bond yields, and a strengthening currency. Japanification advances apace. It is surely far too early for Mr Draghi to make any effort to stop the Euro's recovery, so (we) expect his comments to be well received and to add fuel to the risk-on fire."
They see that EURUSD is on its way to 1.33, GBPUSD has bounced off 1.60 yet again, and will meander higher while the US sees only jobless claims and a 30year Bond auction but will probably see more equity-buying.
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