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Risk aversion still in centre stage – Danske Bank

FXStreet (Edinburgh) - Kasper Kirkegaard, Chief Analyst at Danske Bank, underlined the recent re-emergence of the risk-off trade.

Key Quotes

“The demand for safe assets remains high. Yesterday the trigger for increased demand appeared to be disappointing data out of Germany and Italy but also geopolitical risks continue to weigh”.

“As a consequence, the yield on a 10Y Bund is hovering around an all-time low at 1.09%, which is an indication of falling growth and inflation expectations”.

“Mario Draghi is unlikely to rock the boat, so we expect limited effects on Bunds and EUR money markets following the press meeting”.

“A continued dovish stance would be supportive for peripheral government bond markets”.

“The core markets in the euro-zone performed strongly yesterday, whereas peripheral core markets continue to suffer on the back of the poor risk sentiment, the dismal GDP numbers out of Italy and renewed concerns about Greece”.

No ECB action today but Draghi's press conference could be entertaining - FXStreet

Pablo Piovano, Economist and Lead European Editor at FXStreet believes that the ECB will remain on hold today, but that Draghi's press conference following the interest rate announcement might bring some details on the central bank's further moves.
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