Interest rate differentials continue to tighten between US and EU bond markets. 2-year spreads are down to 92 bp from 100 late last week as firm Ifo data and upward revisions to German GDP forecasts are helping close the USD-supportive rate gap. 10-Year yields are at 77 bp, their tightest since the spring of 2005.
The tighter spreads are not lending EUR/USD much support this morning as profit-taking knocks the unit back below 1.3150. 1.3130, the Tuesday morning low is next support for EUR/USD which trades now at 1.3147.
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