Forex Flash: Measuring the euro’s true performance – UBS

With regards to the EUR, the currencies that it actually truly outperformed all had idiosyncratic reasons for falling on their own accord. “Take NOK and CAD for example - risk currencies which have not done well in what has generally been a risk-on environment – both of their central banks have taken a clear turn towards the dovish side this year and growth is set to disappoint strongly.” suggests Research Analyst Gareth Berry at UBS.

Without the carry (or even strong liquidity in the case of the CAD) to compensate, investors headed elsewhere. SEK fundamentals were hardly any better, but the striking willingness of the Riksbank to countenance higher rates and a more optimistic outlook has helped the currency defy the AAA clear out and maintain resilience. The biggest EUR-cross movers so far are the EUR/JPY and the EUR/GBP. Indeed, “a reversal of safety and stretched positioning played a role, but without the perception of 'new monetary paradigms' emerging in both Japan and the UK, we question whether the EUR truly have done so well.” Berry adds.