Don’t bet on euro rally
10.12.2019, 14:37

Don’t bet on euro rally

An increasing number of banks see euro surging in 1Q2020 to almost $1.16. Strategists bet on Brexit resolution by the end of January 2020 as a major driver for European currency along with stabilizing economy.

ABN Amro Bank NV and Commerzbank AG are seeing euro at $1.14 by March 2020, Morgan Stanley bulls euro to $1.16 in 1Q2020. The currency is seen rising to $1.12 by March before a steady ascent to $1.16 by the end of 2020, up from around $1.1065 now, according to Bloomberg survey.

Indeed euro is seen stronger as of today with recovery signs in leading European economies. Brexit perspectives are seen much brighter while British PM Boris Jonson likely to gain a Conservative majority in Parliament on the elections Thursday 12th. 

The optimistic outlook on ECB further softening monetary policy could be disappointing. Negative rates policy is widely disputed by financial officials in Euro zone. Lowering interest rates deeper could create rather a negative effect on the financial system in Europe than gains for economy. A strategic review of ECB’s monetary policy could take longer than a few months; some unconventional measures could be enacted in the first place. ECB under Christine Lagarde’s presidency is more likely to advocate European government’s fiscal stimulus while the policymaker has a limited room to add liquidity. Lagarde is expected to continue a loose monetary policy and will hardly surprise markets this Thursday after ECB’s meeting.

European governments are more reluctant to Lagarde’s call for action on increasing investments and structural reforms.

European nations as sovereigns are addressing their own agenda and are largely divided in common interests of EU. Germany is following its own budget balance rule; political discord among Christian Democratic Union party and the Social Democratic Party fuels uncertainty; France’s Emmanuel Macron is facing national strikes against pension reform ahead of local governments elections; Italy has a large debt load and is unlikely to provide serious reforms; Spain’s healthy economy with 2% GDP growth in 2019 will hardly enable coalition government to deliver extensive growth stimulus.

EU is still lagging to complete some of the already agreed institutions like banking union, single digital market and the capital market union in Europe. Some limited reforms are to be enacted but the European governments need an extra boost to accelerate common growth-tailored reforms.

To conclude, it is likely euro will make some gains by the end of the year and months to follow. However, such gains could be limited with raising volatility amid Brexit implementation.


Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

Indiscriminate reliance on illustrative or informational materials may lead to losses.


Quotes
Symbol Bid Ask Time
AUDUSD
EURUSD
GBPUSD
NZDUSD
USDCAD
USDCHF
USDJPY
XAGEUR
XAGUSD
XAUUSD

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location