Tuesday
Jan 06th
Record High for Euro USD future
The USD fell to an all-time low today and the Euro FX
future march delivery broke the 1.51 price level. The macroeconomic scenario is
complicated and major currency analysts predict that the rate can rise up to
1.55 by the end of march. We have to focus on rate decisions of both Fed and ECB
to understand the price upside movement.
The US central bank
will likely reduce again its overnight lending rate to fight a slumping economy.
On the other hand it seems that ECB has no intention to cut Euro lending rate
because of inflation concerns fueled by dangerous data release on German import
prices. Considering the interest rate parity theory (IRP), an increase in the
spread between US and Europe interest rates
will carry to a backwardation condition in Euro FX future. We are already in
this condition, because March future is higher than the June's one. We do not
expect Euro FX future to be at 1.55 by the end of march for this reason, however
we expect it to trade above 1.50.
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