Political Risks Eased in Europe, Uncertainties Remain in the US

11 May 2017

Rates & FX View

Political Risks Eased in Europe, Uncertainties Remain in the US

Highlights

Highlights

¨      European election cycle: the French and Dutch rejected far-right parties and elected pro-European leaders. Political risks eased in Europe, underscoring an upgrade to neutral for the block’s currency.

¨      A disappointing 100-day Trump presidency compared to market expectations contributed to a broad USD underperformance YTD.

¨      Rising geopolitical tensions exacerbated by changing US international positions bolstered Safe Haven strong performances YTD: Government Bonds, Yen, Gold, and…a new heaven, Emerging Markets.

¨      So late in the cycle, can the economy strongly recover? What is the Fed room to manoeuvre?

¨      G3 Rates and FX: the USD consolidation is already in progress and we maintain lower than consensus rates forecasts.

This message is intended only for the use of the person(s) to whom it is addressed and may contain information that is privileged or otherwise protected from disclosure. If you are not the intended recipient you are hereby notified that any use, review, disclosure or copying of this message and the information it contains is prohibited. If you receive the message in error, please notify the sender by reply e-mail and discard all its contents.   Thank You.