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Caixabank Research notes that the euro has lost value against the dollar since its April 2008 peak of 1.6, largely because of diverging Fed and ECB policy. It says Trump's expected fiscal expansion has lifted U.S. inflation expectations and widened the bond yield spread.
It expects monetary policy divergence to persist in 2017.
A widening rate spread and stronger dollar make dollar-priced grain and oilseed exports more expensive for euro-zone buyers, which can weigh on U.S. export demand. The effect is an analytical outlook rather than a new policy shock.
caixabankresearch.comRoser FerrerFeb 16, 2017After 533 past bearish macro events, Euro (USD per EUR) moved a median -0.3% over 5 sessions (33% higher; middle half -1.2% to +0.2%), and -0.5% over 20.
After 2,356 past bullish macro events, US Dollar (Broad) moved a median +0.2% over 5 sessions (60% higher; middle half -0.3% to +0.7%), and +0.4% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
