Is EUR a Safe Haven?

While the reaction of USD exchange rates to developments in China is understandable, the movement in EUR rates is somewhat surprising. For the EUR has benefited most so far - clearly acting as a safe haven.

"However, some important factors militate against the continuing strength of the EUR. On the one hand, a marked growth downturn in China would presumably hit the Eurozone as hard, if not even harder than the US. And this would be against a backdrop of the ECB already in expansionary mode to stimulate economic growth and inflation", according to Commerzbank.

This would not raise the question of whether the ECB will defer normalising its monetary policy, but whether it might take further expansionary measures. Moreover, the ECB is likely to show a particularly marked allergic reaction to a stronger appreciation of the EUR, which would endanger its inflation target. Commerzbank suggests, somehwat of a correction of the EUR strength is required.


We Accept: Visa Card Payment Master Card Payment Skrill Payment Bank Wire Payment