#EURUSD @ 1.08996 : Recent Euro strength might be unsustainable – Commerzbank
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Rate hikes come with undesirable side effects. Therefore, Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, is sceptical about current EUR/USD levels.
“Perhaps my perceptions are distorted, but I have the impression that the Fed’s restrictive monetary policy has received more criticism. I now see that those who defend the restrictive Fed policy are coming under fire. Perhaps my perception is due to the fact that this is exactly what I had expected; that criticism of its fight against inflation will start as soon as Fed policy acts restrictively and actually dampens economic activity.”
“For the ECB the revision of expectations was moderate also because the real economic effects of past rate hikes are not yet being felt quite so significantly. With an unemployment rate at record lows Europe is lagging the cycle, if you want.”
“Because it can be assumed that the rate hikes will not remain without effects on the European economy and labour market either, I have my doubts that the recent EUR-strength is sustainable.”
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