EUR/USD to be completely unimpressed by the July ECB meeting - Commerzbank

By FXstreet.com | Updated July 30, 2014 AAA

FXStreet (Córdoba) - According to Antje Praefcke and Esther Reichelt, analysts at Commerzbank, the second half of 2014 will be as calm as the first one for FX markets and despite three of the G10 central banks will be coming forward with interest rate decisions next week, FX markets should still be sailing in clear waters.

Key Quotes

“On Monday the first half of 2014 comes to an end. It has been a slow half year, at least in terms of exchange rate movements. EUR/USD has been trading in a range of just 4ct since the beginning of the year”.

“In fact, current volatility levels are somewhat reminiscent of the Bretton Woods era. Seventy years ago, on 1 July, the Bretton Woods Conference started, which led to the establishment of a system of fixed exchange rates with the US-dollar at the centre. After lasting nearly 30 years, the agreement finally collapsed, partly due to excessive monetary easing”.

“This week, central banks will again be at the centre of attention, with as many as three central bank meetings forthcoming in the G10 universe. However, no major surprises are to be expected. Hence, the second half year looks set to start on the same note as the first half: calm”.

“After all, the ECB has already delivered at its last meeting, which suggests that the euro ought to be completely unimpressed by the July meeting. Even if QE were to be on the agenda again, it should be clear to investors that it is too early to speculate over such sharp moves. For now, the ECB is likely to remain on hold to see the effect of its latest measures”.

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