EUR/USD bulls are supported by U.S. investors
That is the market, someone gain, someone lose. Negative interest rates weigh on the European banks and insurance companies, which are concerned about the ECB fresh monetary stimulus. The U.S. investors, on the contrary, get an advantage of the negative German bond yields. Buying 10-year German bonds for 3 months, they simultaneously hedge currency risks at a forward euro exchange rate of $ 1.111. As a result, the return on the investments, even if the bond prices are the same, is 2.2%. This is higher than the Treasury bond rates. Increasing volume of…
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