23.10.201307:46:00UTC+00Research: Europe Will Not Want Eur Strength to Continue

Quotes from HSBC Global Research:

-Europe will not want the EUR strength to continue. What little recovery we have seen in the Eurozone economy has been driven by the swing in net trade.

-With unemployment likely to remain high, a further revival in exports will be critical to any additional acceleration in overall growth. While the US Federal Reserve delayed its QE3 tapering for fear of the damage being exacted by higher long-term interest rates, Eurozone policymakers will be more concerned about the currency's relentless advance.

-The Real Effective Exchange Rate (REER) of the EUR has appreciated by an unhelpful 9% in the last year. This is the potential Achilles heel, and will demand a policy response. This could come in many forms, be it rhetoric, a rate cut or renewed liquidity injections by the ECB, and stifling the EUR's rise will be a key part of the strategy.