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The most spectacular change since our last Monthly Strategy paper has been the strength of the euro against the dollar. The currency’s appreciation reflects the market’s evolving expectations about the relative policy movements of the US Federal Reserve (Fed) and the European Central Bank (ECB). Markets seem to have decided to ignore Fed chatter and have reduced their expectations of future rate increases. At the same time they are also ignoring the ECB’s dovish rhetoric and upped their expectations of tapering. The result of which has been a stronger euro and a depreciating dollar.
Source : AXA Real Estate
