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0914 GMT – The euro is yet to see any meaningful boost from positive developments in Ukraine peace talks given its wide undervaluation versus the dollar, ING’s Francesco Pesole says in a note. The euro is trading at a 2% undervaluation against the dollar, he says. The euro versus the safe haven Swiss franc “may prove to be a more preferred way to play Ukraine peace hopes, but euro-dollar undervaluation cannot be dismissed, and a return above $1.160 in the near-term remains our baseline,” Pesole says. The euro is last up 0.1 at $1.1527 against the dollar. Against the Swiss franc, the euro rises 0.2% to a one-and-a-half-month high of 0.9331 francs, according to LSEG. ([email protected])
Sterling Implied Volatility Rises Ahead of Budget
0840 GMT – A measure of expected price swings in the options market, or implied volatility, for the euro-sterling exchange rate is rising ahead of Wednesday’s U.K. budget, ING’s Francesco Pesole says in a note. The gap between one-week euro-sterling implied volatility and realized volatility—a measure of actual moves over the past week—has widened the most since the 2022 mini budget that sparked market turmoil due to unfunded tax cuts, he says. “This signals that despite some recovery in back-end gilts [U.K. government bonds], the currency market remains concerned ahead of tomorrow’s budget,” Pesole says. One-week implied volatility is around 6.4% compared to realized volatility of 3.6%, LSEG data show. The euro falls 0.1% to 0.8780 pounds. ([email protected])
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