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21 Mar 2016
Currencies disobey their central bank masters – Danske Bank
Research Team at Danske Bank, suggests that the currency moves to the central bank decisions in March have been remarkable as the central banks seem less interested in targeting their own currencies.
Key Quotes
“Overall, the story of divergence across central banks has become smaller and the latest policy moves indicate the start of the end of the currency war.
As a result, despite policy easing by the ECB, Norge’s Bank and the Riksbank, we have actually seen several currencies strengthening instead of weakening. Particularly, the ECB’s shift from cutting the policy rate and targeting the exchange rate to focusing on the bank-lending channel is a sensible step. For the time being, we do not see EUR/USD moving lower and still expect 1.16 on a 12M horizon.”
Key Quotes
“Overall, the story of divergence across central banks has become smaller and the latest policy moves indicate the start of the end of the currency war.
As a result, despite policy easing by the ECB, Norge’s Bank and the Riksbank, we have actually seen several currencies strengthening instead of weakening. Particularly, the ECB’s shift from cutting the policy rate and targeting the exchange rate to focusing on the bank-lending channel is a sensible step. For the time being, we do not see EUR/USD moving lower and still expect 1.16 on a 12M horizon.”