Euro likely to continue trading as a funding currency – BNPP

FXStreet (Barcelona) - The Research Team at BNP Paribas, note that EUR is likely to continue to trade as a funding currency as they anticipate the rates to stay low for an extended period.

Key Quotes

“We expect rates to stay low for an extended period of time. Given this, the EUR is likely to continue trading as a funding currency. The current measures announced by the ECB will not be enough to expand its balance sheet by the desired EUR 1 trn."

"Our economists expect that the ECB will be forced to move to a broader purchase program imminently. If the ECB succeeds in pushing inflation expectations higher, real yield differentials will move further against the EUR. “