ECB, rather than Portugal, is the main threat to the EUR
With the US markets closed for Independence Day holiday today, the focus shifts to ECB and BOE meeting. For EUR, Eurozone politics has come back to bite amid uncertainty over Portuguese government ahead of the Troika review and the 2014 budget. But just as was the case for Cyprus earlier this year, we think that the ECB backstop will prevent the jitters from turning into a wider European crisis. This is supported by the price action in the bond markets which suggests the stress has been idiosyncratic rather than systemic.
Read the full report: FX Daily
BNP Paribas