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10 Jul 2013
Flash: Eurozone concerns fail to rattle FX market – BBH
FXstreet.com (New York) - According to the BBH Global Currency Strategy Team, “There have been a couple of other developments recently that strike us as important, but do not appear to be impacting prices today.”
First, emblematic of the relaxation of fiscal constraints in the euro area, France reported that its January-May budget deficit rose to -EUR72.6 bln from -EUR66.8 bln in the same 2012 period. Previously, Italy also reported that its budget deficit is larger this year than last.
“One of our thematic points has been that fiscal policy is tighter this year in the US than the euro area. The relatively tighter US fiscal policy is now being complimented by prospects that the Fed eases off the monetary accelerator later this year, well before the Europe or Japan.” the team adds.
Secondly, “while there is concern about the difficulty the US will have exiting from QE, we have long doubted that Portugal will be ready to exit from its aid program a year from now.” There is talk today that Portugal may seek a precautionary line of credit from the EU. There is also some speculation that Ireland may explore similar options.
First, emblematic of the relaxation of fiscal constraints in the euro area, France reported that its January-May budget deficit rose to -EUR72.6 bln from -EUR66.8 bln in the same 2012 period. Previously, Italy also reported that its budget deficit is larger this year than last.
“One of our thematic points has been that fiscal policy is tighter this year in the US than the euro area. The relatively tighter US fiscal policy is now being complimented by prospects that the Fed eases off the monetary accelerator later this year, well before the Europe or Japan.” the team adds.
Secondly, “while there is concern about the difficulty the US will have exiting from QE, we have long doubted that Portugal will be ready to exit from its aid program a year from now.” There is talk today that Portugal may seek a precautionary line of credit from the EU. There is also some speculation that Ireland may explore similar options.