FX market fails to register sovereign issues
During the height of the Eurozone crisis, being short the euro was considered the most convenient way to express a negative view on developments in the periphery. The process also worked in the opposite direction: tightening attracted flows back into the currency union, confounding many shorts in the process. We now wonder whether FX investors have been so scarred by the reversal such that they have – by choice or force – become oblivious to Eurozone risks, be they political or fiscal.
Read the full report: UBS