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20 Sep 2013
Flash: EUR/USD in positive territory on US Balance sheet - TD Securities
FXstreet.com (London) - Research teams at TD Securities said that the EUR/USD might benefit from a growing US balance sheet.
Key Quotes:
"The Fed’s decisions this week suggest that its balance sheet will continue to grow – significantly – for some time to come. That is implicitly USD-negative".
"Except that the USD has hardly reflected relative balance sheet considerations for some time. That is especially the case versus the EUR where the ECB’s balance sheet has slimmed down significantly this year. If balance sheets had been a significant and more consistent driver of the exchange rate (as in 2010/2012), EUR/USD might be trading closer to USD1.45/1.50 now".
Key Quotes:
"The Fed’s decisions this week suggest that its balance sheet will continue to grow – significantly – for some time to come. That is implicitly USD-negative".
"Except that the USD has hardly reflected relative balance sheet considerations for some time. That is especially the case versus the EUR where the ECB’s balance sheet has slimmed down significantly this year. If balance sheets had been a significant and more consistent driver of the exchange rate (as in 2010/2012), EUR/USD might be trading closer to USD1.45/1.50 now".