Forex
Euro Recovers Ground Against Dollar Amid Softer Currency Backdrop
The Euro has begun to recover from its recent sell-off against the US Dollar, according to ING's Chris Turner. The EUR/USD pair is grinding higher, moving back towards 1.1650 after being affected by Kevin Warsh's speech a week ago.
A softer dollar backdrop versus Emerging Market currencies and pro-growth G10 currencies supports the Euro, making it an attractive option for investors. However, Turner also flags German local election risks as one potential risk factor for the Euro.
The EUR/GBP exchange rate is consolidating after breaking above 0.86 yesterday, but Turner predicts that it will break higher to 0.87 in the fourth quarter. He notes that the gilt sell-off and its implications on UK public finances played a role in this development.