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CBA recommended buying euro against the dollar


13 April 2020

The stimulus package and credit lines through ESM adopted the day before will help restore the eurozone economy faster. Australia's largest financial conglomerate, Commonwealth Bank of Australia, recommended buying the euro against the dollar on expectations that the eurozone’s economic response to the coronavirus would provide financial stability in the region. 

The agreed package of support measures includes a special credit line for eurozone countries through the European Stability Mechanism (ESM). For investors, this is a signal that thanks to the ESM, countries now have access to sufficient liquidity and are able to prevent the destabilizing expansion of government bond yield spreads.

The new stimulus package along with previously announced tax and fiscal support methods will lead to a faster recovery in the region than previously anticipated. 

This will allow the euro/dollar to return to a fair price of about 1.1600, according to Commonwealth Bank of Australia.

The euro/dollar on Monday morning, April 13, was trading at 1.0940. The level of 1.1600 was last seen in this currency pair in October 2018.

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