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22 Mar 2013
Forex Flash: A deal can still be made on Cyprus - Societe Generale
FXstreet.com (Barcelona) - Sebastien Galy, Senior FX Strategist at Societe Generale believes that a deal can still be made on Cyprus, and that may lead to a relief risk rally.
However, he adds that in this situation he would use the bounce to sell the Euro. Looking ahead he still sees further hits to the great European project with the deteriorating political environment: widening BTP spreads capable of hurting the euro this spring. He fears another euro area (EA) shockwave, but it will be smaller than last year's (smaller foreign exposure, OMT threat). Further, he notes that the global economy is better equipped to withstand it. He writes, “With monetary policy differentiation increasingly patent, the traditional high-beta G10 currencies can offer resilience to risk-off conditions.”
However, he adds that in this situation he would use the bounce to sell the Euro. Looking ahead he still sees further hits to the great European project with the deteriorating political environment: widening BTP spreads capable of hurting the euro this spring. He fears another euro area (EA) shockwave, but it will be smaller than last year's (smaller foreign exposure, OMT threat). Further, he notes that the global economy is better equipped to withstand it. He writes, “With monetary policy differentiation increasingly patent, the traditional high-beta G10 currencies can offer resilience to risk-off conditions.”