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Forex Flash: EUR/USD stability is impressive, considering... - BTMU

FXstreet.com (Barcelona) - Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ notes that given the ECB rate cut, speculation on negative rates, and the strong US employment report, the stability of EUR/USD is impressive.

He feels that it suggests that factors like reserve re-cycling may well be playing some role in supporting the euro, but the stability of the periphery debt markets in conjunction with record current account surpluses also mean reduced euro sales in the market. He writes, “It’s not necessarily due to increased foreign investor demand for periphery debt – we guess the core is where foreign investors continue to go – but the stability in the euro-zone is reducing the appetite for speculative selling.” He comments that the current IMM euro speculative short position is around only one-third the size of the weekly average over the past year – so this sustained period of OMT-induced calm in the euro-zone financial markets is keeping the speculators at bay. Levels around 1.3000 will probably persist for a time yet.

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Nomura economist Young Sun Kwon notes that with CPI inflation falling to 1.2% y-o-y in April (below the BOK's target), there are increasing concerns about the possibility of deflation. However, he doubts that the BOK will concur.
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Forex Flash: May pegged as sell-month for equities? – Investec

Whilst currency markets were quiet, equity markets continue to make history. US equities hit new all time highs yesterday, fuelled by better than expected corporate earnings from across the pond.
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