23/06/2016

Expert Commentary

Thursday, June 23, 2016

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

To my mind, if we get a ‘remain’ vote, chances that the yields will be pushed slightly above zero again are extremely high.

Last week, yields on the 10-year government debt of Germany dropped below zero for the first time. In your opinion, is it a

temporary resistance point or not? Why?

It is a very difficult question. On the one hand, it is temporary to the extent that the whole situation was mainly driven by

‘Brexit’-related fears in financial markets and the fact that the ECB is still in the market, obviously. Nevertheless, the main driv-

er of pushing yields below zero was the ‘Brexit’. We will have to wait until the results of the referendum are known to see

whether the slump was only temporary. To my mind, if we get a ‘remain’ vote, chances that the yields will be pushed slightly

above zero again are extremely high.

European stocks slumped to their lowest levels on last Monday amid ‘Brexit’ fears. In your point of view, if the UK votes next

week to leave the EU, what impact will it have on German economy?

If the UK was to vote in favour of a ‘Brexit’ today, we will immediately get another round of financial market turmoil. This

would also mean weaker sentiment indicators and probably through this kind of sentiment we would also see a slight weaken-

ing of the economic growth in Germany. The more interesting question would be how long actually the negotiations about the

‘Brexit’ will take. What I believe is that on the June 24, no matter what is going to happen, the UK will still be a member of the

European Union. Thus, the direct macro-economic impact on Germany will also depend on the speed of the negotiations.

Therefore, if or when the UK really leaves the EU, this could cost Germany around 0.3% of growth.

What are your forecasts for EUR/USD and EUR/JPY for the rest of 2016?

We do expect to see quite stable performance of both EUR/USD and EUR/JPY currency pairs. There is going to be moderate

fluctuation on both sides, though in the current environment it looks like there will be only very few if any rate hikes coming

from the Fed, while the ECB will continue with the QE. Thus, we will only see a marginal recovery, therefore the EUR/USD will

probably fluctuate somewhere around $1.10-1.12, where we are right now. The same performance will be expected from the

EUR/JPY currency pair.

Carsten Brzeski Chief Economist

ING-DiBa Germany

Carsten Brzeski, Chief Economist at ING-DiBa, on German economy and EUR

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 re-

Just click on a subject you are interested

in and see what experts have to say

Dukascopy Bank SA, Route de Pre-Bois 20, International Center Cointrin, Entrance H, 1215 Geneva 15, Switzerland tel: +41 (0) 22 799 4888, fax: +41 (0) 22 799 4880 research@dukascopy.com

Disclaimer Everything in this article, including opinions and figures, is provided for informational purposes only and may not be interpreted as financial advice or solicitation of products. Dukascopy group assume no responsibility for the completeness or the accuracy of any data contained in this article. Financial figures indicated in this article have not been verified by the Dukascopy group. Views, opinions and analyses are those of the author of the article, and are not endorsed by the Dukascopy group. Dukascopy group waive any and all warranties, express or implied, regarding, but without limitation to, warranties of the merchantability or the fitness for a particular purpose, with respect to all information in this article. Dukascopy group shall under no circumstances be responsible for any direct, indirect, consequential, contingent or any other damages sustained in connection with the use of this article.

Newest releases and archive: Fundamental Analysis Technical Analysis Press Review Market Research Expert Commentary Dukascopy Sentiment Index Trade Pattern Ideas Global Stock Market Review Commodity Overview Economic Research Quarterly Report Aggregate Technical Indicator Additional information: Dukascopy Group Home Page Market News & Research FXSpider Live Webinars Dukascopy TV Daily Pivot Point Levels Economic Calendar Daily Highs/Lows SWFX Sentiment Index Movers & Shakers FX Forex Calculators Currency Converter Currency Index CoT Charts Social networks:

Fundamental Analysis Technical Analysis Press Review Market Research

Expert Commentary Dukascopy Bank Sentiment Index

Trade Pattern Ideas Global Stock Market Review

Commodity Overview Economic Research Dukascopy Aggregate Technical Indicator