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EUR: Still a bit cheap – ING

EUR/USD remains around 1% undervalued according to our short-term fair value model, ING's FX analyst Francesco Pesole notes.

Probability of a major revamp in EUR/USD volatility remains low

"That shows that the rally in the US Dollar (USD) – net of last week’s correction – has still exceeded what can be justified by market drivers like rates and equity differentials. However, the euro is lacking bullish thrust and – as discussed above – a potential end to the US shutdown is not a clear-cut USD negative."

"Today’s eurozone calendar includes the ZEW surveys in Germany. These have not sent the kind of optimistic vibe of the Ifo, and consensus is looking at a modest improvement to 41 in the expectation index and to -78 in the current situation index."

"We continue to look at 1.150 as a floor and see room for stabilisation close to 1.160 based on our short-term valuation indicators, but the probability of a major revamp in depressed EUR/USD volatility remains low this week."

ECB’s Elderson: The risks of inflation turning out higher than expected are balanced

In an interview with a Spanish newspaper, Expansion, on Tuesday, European Central Bank (ECB) board member Frank Elderson shared his view on the inflation outlook.
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Gold: Regaining momentum – OCBC

Gold rebounded sharply this week, riding on hopes that US government shutdown may be nearing its end. It may sound odd but gold is behaving more like an 'alpha' proxy outperforming traditional risk assets. XAU last seen at 4134.79 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.
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