EUR: 3 Reasons Why M-Term Flows Should Trend Towards EUR Buying In 2018 - Nomura

Nomura FX Strategy Research discusses the EUR outlook from the flows perspective and thinks that the medium-term flow balance should trend toward more EUR-buying, supporting EUR’s outperformance into 2018.

"We expect fixed income flows to be less EUR negative into 2018, which should put the basic balance firmly in surplus, for three reasons: 1) ECB tapering will ease the supply and demand situation for euro area bonds, attracting more foreign demand while slowing euro area investors’ foreign bond buying, 2) the lower share of negative yielding bonds in the euro area bond market will have a non-linear impact on global fixed income flows, and 3) near-term euro area political events are likely to have a more muted impact on global fixed income flows," Nomura argues.

Source: Nomura Securities Research