Gavekal Capital: EUR/USD v Interest Rate Differential (Update)

Friday, October 3, 2014

EUR/USD v Interest Rate Differential (Update)

In June (here) and again last month (here), we noted a curious divergence in two series that have historically moved together-- the EUR/USD exchange rate and the interest rate differential between the respective 2-year OISs. Though the spread has continued to widen some, it has stabilized over the last month or so and it has really been the plunge in the euro that has helped narrow the gap thus far:

About Gavekal Capital

Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
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