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Aug 08 - 02:55 PM

EUR: A Preferred Funder If Quiet Summer Markets Prompt Renewed Interest In Carry Trade - ING

By eFXdata  —  Aug 08 - 01:30 PM

ING Research sees a scope for lower EUR/USD on a renewed interest in carry trade through the rest of the Summer.

"On Friday evening, the ratings agency Moodys shifted its rating outlook on Italy's sovereign debt from stable to negative. Given that Moodys' Italian rating is just one notch above junk - that has raised some eyebrows and no doubt will call the European Central Bank into further supportive action, be it through the more aggressive re-investment of the Pandemic Emergency Purchase Programme or potentially even using its new support instrument - the Transmission Protection Instrument (TPI)," ING notes. 

"None of this will help the beleaguered euro, where the ECB's trade-weighted measure remains glued to the lows of the year. Indeed, if quiet summer markets prompt renewed interest in the carry trade, the euro will probably be one of the preferred funding currencies," ING adds. 

Source:
ING Research/Market Commentary

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