Euro-USD in Tug-of-War, Recession Risk Rises as Yield Curve Flattens

Euro-USD in Tug-of-War, Recession Risk Rises as Yield Curve Flattens

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

Euro-Dollar Caught in a Fiscal-Monetary Tug-of-War

Highlights

  • Euro-USD rate hemmed in by divergent monetary, fiscal policies
  • Options indicate the euro faces greater downside than upside risk
  • U.S. monetary policy could help push dollar higher over next 12 months
  • U.S. recession risk increases toward 2020, could weaken dollar versus euro
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The Federal Reserve, Inflation and the Flattening Yield Curve

Video Highlights

  • Fed on track to raise interest rates at June 12-13 FOMC meeting
  • Further rate hikes will depend on core inflation rate, yield curve
  • Yield curve is at its flattest since 2007, eve of the Great Recession

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