A client note from Commerzbank …
There is a paragraph on the levels and outlook for EUR, which starts off straight enough but quickly takes a much more interesting turn. Here’s the paragraph (in full):
EUR:The fact that EUR-USD briefly dipped below the 1.3500 mark on Friday to then return to the initial level of 1.3520-1.3540 relatively quickly illustrates that many market participants are still expecting a sideways move. We have to continuously expect jumps into either direction, as in the current environment liquidity disappears from time to time. In particular as banks, in their role as stable providers of liquidity, are present much less than they used to be – thanks to increasing concentration on the FX market and to increasing high frequency trading. Politicians and the public in the meantime prefer concentrating on actual or alleged fixing scandals. The rewards for politicians who want to distinguish themselves on the regulatory front are easier to obtain in that field.
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Commerzbank are onto something here.
