Exposure rates of the Dorval Asset Management Range – 18th August 2017

"At the service of a responsible saver, asset management supports economic cycles and societal issues"
Sophie Chauvellier
Portfolio Manager, Economic Research and Asset Allocation
Investors were waiting on news from the Fed and the ECB meetings this week. 

The recent movement of the euro against the dollar, initially provoked by the relative slowdown of US activity compared to European activity, was reinforced by the perception of a less-accommodating ECB that wasn't too concerned with the appreciation of the euro.

But the report from the ECB meeting was actually the opposite. It addressed the stricter financial conditions associated with the rate hikes and the appreciation of the euro. The Governing Council confirmed the need to maintain a very accommodating monetary policy while inflation is slow to reach its target. As a result, this complicates the tapering announcement that investors fear. The issue will be discussed in autumn, but the most likely scenario is that the ECB will announce an extension of the current purchasing programme (€60bn monthly until December) for at least 6 months

At the same time, the Fed confirmed its gradually tightened policy for monetary conditions in the context of a recovery of economic activity in Q2 compared to Q1. Inflation, which is also slow to reach its target, is the main concern for members who question the temporary nature of this weakness. They argue for a very gradual tightening. The normalisation of the balance sheet is expected to begin soon if the context remains favourable.

The shift of the respective messages argues for at least a stabilisation of the euro-dollar exchange rate to levels close to 1.18, particularly as the economic momentum is now back in favour of the United States.



The markets remain disrupted, in low volumes, by the misdemeanours of the US president, both geopolitically and in domestic affairs. These events further reduce his ability to make good on his campaign promises, especially in terms of financial policy, and leads to profit-taking on US equities in particular that are valued at a very high price.


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