MUFG Research sees the first batch of EU Coronavirus bonds as a positive signal for the EUR.
"The resilience of the euro continues to signal that investors have more confidence in the euro following decisive action to address the negative fallout from the COVID crisis taken earlier this year including setting up the European Recovery Fund. There were further encouraging signs yesterday when the European Commission announced that it had issued a EUR17 billion dual tranche social bond with EUR10 billion due in October 2030 and EUR7 billion due in 2040. It was the highest amount ever borrowed in the history of the EU,"MUFG notes.
"The EU welcomed the strong investor interest as further proof of the new-found interest in EU bonds which add to the attractiveness of the euro as the most liquid alternative to the US dollar. Strong demand from central banks and official institutions for the 10-year bond which took up 37% of the distribution. We view it is another positive signal that reserve holders are becoming more confident again in the euro," MUFG adds.