The euro held steady just under its highest in two months against the dollar on ...
SINGAPORE - The euro held steady just under its highest in two months against the dollar on Tuesday, on expectations that coronavirus-driven monetary easing in the United States can and will run deeper than any similar action in Europe.
But with the ECB’s benchmark refinancing rate at 0% and the Fed’s funds rate range between 1.5% and 1.75%, the Fed has more room to manoeuvre, leading investors to unwind carry trades accordingly. “The markets are seeing vulnerabilities by what is priced into rates senses a Fed who may go hard at 18 March meeting and cut by 50 basis points.”
Futures imply that a 25-basis-point cut is all but certain, leaving the Australian dollar vulnerable to a surprise either side. [AUD/]“If they cut by 25 and signalled more to come, that would probably hold the Aussie where it is. If they cut by 25 and signalled no more to come, I think the Aussie would rise.”
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