We believe the potential for negative events in Europe will keep the euro on the defensive against the dollar and sterling, but the downside looks limited in the near term given investors in general are already broadly holding negative positions.
Investors seemed to react not to what the Fed President said, but rather to what he didn’t say. However, the sell-off was short-lived and today silver has been clawing its way back.
There are some positive dots that we can join together when looking at the UK economy, which when viewed as a connected string, is beginning to show a slightly more creditable and credible pattern.
Although we remain cautious regarding exposure to European equities in general, selective opportunities may be emerging, as long as global central banks maintain the easy- money stance that is helping to fuel appetite for risk.
I am indebted to Chris Charlton from the foreign exchange specialists, Centa Asset Management in Frankfurt who regularly produces fascinating views and opinions on the varying strengths of the differing currencies.