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28 Feb 2013
Forex Flash: EUR/USD still pegged at below 1.3000 by Q4 – Westpac
At the monthly press conference on January 10, ECB president Draghi happily pointed to “a significant improvement in financial market conditions and a broad stabilization of cyclical indicators.” He was quite entitled to do so and we shared the optimism on EUR/USD as it probed as high as 1.3700 on February 1.
However, “we didn’t change our forecast for the EUR/USD to be back below 1.3000 by Q4 2013, given our gloomy view on European growth, concern that sovereign debt troubles would resurface and optimism over the US economy in H2.” Warns Global Strategist Sean Callow at Westpac.
Clearly the past week has not been helpful for EUR’s prospects of returning to the mid-1.3000s. The advance estimates of Eurozone Feb PMIs were disappointing and more potently, Italy’s elections caused much more turmoil than polls had suggested. The strong showing by protest party Five Star produces the prospect of either a very awkward coalition of rival parties with clashing policies or fresh elections with no guarantee of a stable outcome.
However, “we didn’t change our forecast for the EUR/USD to be back below 1.3000 by Q4 2013, given our gloomy view on European growth, concern that sovereign debt troubles would resurface and optimism over the US economy in H2.” Warns Global Strategist Sean Callow at Westpac.
Clearly the past week has not been helpful for EUR’s prospects of returning to the mid-1.3000s. The advance estimates of Eurozone Feb PMIs were disappointing and more potently, Italy’s elections caused much more turmoil than polls had suggested. The strong showing by protest party Five Star produces the prospect of either a very awkward coalition of rival parties with clashing policies or fresh elections with no guarantee of a stable outcome.