Gains in stocks drag DXY to early October low of 110.055 and EUR/USD to parity – SocGen

Another impressive up-day for the S&P 500 (+1.6%) leaves the US Dollar Index (DXY) vulnerable. What’s more, the EUR/USD pair has a go to parity, economists at Société Générale report.

Higher stocks lift European currencies

“The move lower in yields must be nuanced. The bulk of the flattening since last week has taken place in the long end, courtesy of mean reversion and adjustment in positioning. Moves in the front end are modest and no significant repricing has taken place in where US rates will peak next year.”

“But at the current rate of gains in stocks, the DXY will soon test the early October low of 110.055 and EUR/USD will have a go at parity.”

“European currencies led by SEK, GBP, NOK and EUR are shining for a change as we approach month-end.”