Forex Flash: Euro benefiting with reduction in risk, not with economic recovery - HSBC

The Euro has been strongest currency among majors since year started, followed by the Kiwi and Swiss Franc, but not because markets think the UE it's on its way to a “full-blown economic recovery,” but because of a reduction in risk, the HSBC Global Currency Strategy Research Team believe.

“Under this current period of normalisation,” the Team says, “the EUR is benefiting the most but not in the traditional way. The benefit is to do with a reduction in risk and not because the market believes the Eurozone is in the process of a full-blown economic recovery. It is important not to confuse the reduction in binary risk with a return to the traditional post crisis world,” the analysts conclude.