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JGB TECHS

(Z1) Strong Weekly Close

THAILAND

Market Closure

JGBS

Nothing On Local Docket, Omicron Eyed

NZD

Underperforming

US EURODLR FUTURES

EDZ4/Z5 Steepener Flow

EURO-DOLLAR
EURO-DOLLAR: Wednesday saw Nomura note that they "remain long EUR/USD as it's
clear the European recovery story is in motion and countries are in the process
of relaxing their lockdowns, with so far no clear sign of a pickup in virus
cases. The risks to this view stem from US growth expectations suddenly
improving or lockdowns elsewhere worsening. It's a fine balancing act, but we
believe the recent move lower to $1.12 represented a buying opportunity - not
the signs of a new downtrend. Monthly ETF inflows continue to support EUR. Long
EUR is a consensus trade in real money space, but leveraged funds remain short:
it's not a crowded long yet. Policy-makers and re-opening measures are helping
EUR, which is a pro-cyclical currency. If a headline boosts growth expectations,
EUR will usually follow higher. Central bank balance sheets have stopped
expanding at the same rate, but key asset purchases continue. The balance of
payments for the euro area in April was awful, but the FX-sensitive components
were less so. The banking sector and euro area asset outperformance vs the US
has started to wobble and look less V-shaped, but the July EU summit may change
that and with it support EUR."
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com