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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FOREX
- Momentum on EURUSD has been firm in the past 14 months amid strong USD weakness; the single currency is up nearly 15% against the greenback since its low of 1.0636 reached on March 23 2020.
- Some investors are confident that the risk-on environment combined with positive surprises in economic data in the Euro area will continue to support EURUSD in the coming months.
- However, we have also seen that China credit and 'liquidity' have been contracting sharply in the past few months and therefore represent a risk for global risky assets and risk on currencies.
- Even though the EUR has been a funding currency in the past few years and analysts have viewed the euro as a risk off currency, it is very likely that preference for the USD will drive EURUSD down if uncertainty rises (Euro is still risk on).
- In the past cycle, we have seen that EURUSD tends to decrease when China liquidity tightens as risk aversion leaves risk on assets vulnerable; this chart shows that the year-on-year change in China Total Social Financing 12M sum has led EURUSD by 6 months.
- Can the momentum on EURUSD continue without Chinese 'help'?
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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