Euro: Yield spreads hint at recovery against US Dollar – MUFG
The post Euro: Yield spreads hint at recovery against US Dollar – MUFG appeared on BitcoinEthereumNews.com. MUFG’s Derek Halpenny highlights that European Central Bank (ECB) minutes added little new information but confirmed openness to another rate hike, consistent with MUFG’s call for a 25bp move in September. Despite the Euro being July’s weakest G10 currency, a turning 2-year yield spread and potential US yield declines could support renewed EUR/USD upside in coming weeks. ECB stance and yields guide Euro outlook “The ECB will be certainly less concerned over longer-term inflation expectations becoming un-anchored with the 5y5y inflation swap rate having declined since the initial ceasefire was agreed.” “If crude oil and/or natural gas prices were to rebound sharply then risks will rise of course but at this point longer-term inflation expectations remain well anchored.” “In that context we see continued risks of the ECB acting again consistent with our current forecast of another