Euro to benefit if risk for China assets increases ?


Comments from Deutsche bank on the EUR, with comments on how China risk in linked in:

cyclical picture dim on multiple fronts 

  • trade wars
  • Brexit
  • Italian risks

 DB sees EUR/USD trying to break 1.10 over the summer though not far beyond.

Do not see extended fall for the EUR/USD:

  • European balance of payments continues to be “Japanized” with current account recycling decelerating further this year
  • Second, the Fed has greater potential to ease policy which should eventually be more negative for the dollar
  • Third, the euro is likely to benefit from an unwind of euro funding as well as pricing some “dumping” risk of China assets. 

Not sure on 1 but I see their point on 2 and 3.


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