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Real yields in EMU favour a lower EUR – BTMU

FXStreet (Edinburgh) - Lee Hardman, Currency Analyst at BTMU, argued that declining real yields in the euro area will impact in the single currency.

Key Quotes

“The modest pick-up in market-based measures of inflation expectations in the eurozone is further evidence that the ECB’s policies are proving successful”.

Real yields in the euro-zone are beginning to fall sharply further undermining the euro”.

“The 5-year (real) yield on German inflation-linked bonds has decreased by around 90 basis points since early this year prior to the ECB’s QE announcement”.

“ECB President Draghi has recently stated as well that there is “good reason to believe that as our balance sheet expands it will support a rebound in inflation expectations”.

“It is one channel through which ongoing ECB easing will continue to weigh on the euro through potentially further lowering real yields in the euro-zone”.

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