💶🔺EUR/USD 5-Year Swaps Extend Higher: Cable FX Macro

**As seen in Macro Walk report 03/24/23, subscribe at cablefxm.co.uk/reports

• EUR-USD 5-year swap spreads extended higher this week, by Friday close the differential finished at -58bps vs the prior week of -68bps. This records a massive 44bps 1-month move in favour of EUR rates, then the differential ticked at -103bps

• Short-term historical beta studies show that the EUR/USD spot rate is detached from rates, effectively, this is translated into an extended rise in swap spreads while the spot failed to re-test or break off its YTD highs of 1.1033

• While the spot rate is trading in line with risk, swap spreads are hard to ignore as the differential rises to the highest levels since 2013. Fed's tightening cycle is getting priced out, while the ECB is seen delivering further