Maraging Partners expect lower EUR/USD by the end of Q3 2014

Saturday, 09 August 2014 00:00

Maraging Partners, a Moscow-based currency consultancy, have published their FX market view for Q3 of 2014. The report covers EUR/USD, USD/RUB, and EUR/RUB, and combines news-based and quantitative approaches. Maraging Partners expect lower EUR/USD by the end of Q3 2014: "Our forecast remains unchanged: the crisis around Ukraine has passed its peak and is being pushed to the back burner. Meanwhile, an important differentiating factor which used to work for EUR -- the growth and integration of the European markets -- does not look as promising as before.

The credit slowdown in Russia will not by itself weaken the RUB because the low sovereign debt creates no need for financial repression in Russia while the reduced rate of credit creation, everything else being equal, is not bad for the RUB.

The visible part of Western sanctions against Russia amounts to the fight against evasion of taxes and other risks by placing assets abroad, a fashionable subject in the age of financial repression, no doubt, but not necessarily relevant. So-called stealth sanctions are warnings to investors that should they buy Russian assets now, it will be illegal for them to sell such assets after more substantial sanctions are imposed. These are verbal interventions of sorts, and as long as they are believed to be credible, they do influence the markets."

See full text of the report on the Maraging Partners web site.

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