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18 Feb 2014
Flash: EUR support exhusting - BAML
FXStreet (Guatemala) - Athanasios Vamvakidis , FX Strategist at the Bank of America Merrill Lynch noted the recent supporting flows for the Euro but suggests and expects that such flows to subside.
Key Quotes
"Our recent reports have been emphasizing the importance of flows in understanding the Euro's resilience so far in 2014. EUR/USD has been range-bound, driven by a number of offsetting forces, and flows have been a key determinant for the Euro within its current range."
"Indeed, we have recently said that the Euro has been supported by strong equity flows, despite the market sell-off in most of the rest of the world so far in 2014. Although we expect such flows to subside, as the market has already adjusted from being underweight European assets and Eurozone earnings have mostly disappointed recently, they have kept the Euro within a range at a relatively strong level for now."
"In this report, we use proprietary data to outline our views that corporate flows have also been supporting the Euro since end-2012, after Mario Draghi's commitment to do whatever it takes to save the Euro and the European Central Bank (ECB)'s OMT. Our analysis suggests that European corporates were shorting the Euro as the crisis unfolded until the summer of 2012, but have been gradually buying Euros since then."
Key Quotes
"Our recent reports have been emphasizing the importance of flows in understanding the Euro's resilience so far in 2014. EUR/USD has been range-bound, driven by a number of offsetting forces, and flows have been a key determinant for the Euro within its current range."
"Indeed, we have recently said that the Euro has been supported by strong equity flows, despite the market sell-off in most of the rest of the world so far in 2014. Although we expect such flows to subside, as the market has already adjusted from being underweight European assets and Eurozone earnings have mostly disappointed recently, they have kept the Euro within a range at a relatively strong level for now."
"In this report, we use proprietary data to outline our views that corporate flows have also been supporting the Euro since end-2012, after Mario Draghi's commitment to do whatever it takes to save the Euro and the European Central Bank (ECB)'s OMT. Our analysis suggests that European corporates were shorting the Euro as the crisis unfolded until the summer of 2012, but have been gradually buying Euros since then."