Hello all,
i would like to know your opinion on the EUR for next year? think it will strenghthen? would low oil prices benefit European economies in general? few months ago EUR/USD almost reached 1.4 on may this year. whats the probability that we will see these levels?
Eurozone economy will still be vulnerable, the ECB needs to pump its balance sheet with another 1bn Euro, a QE is not far away. GDP in the US will stabilize, job markets are in good health, and the Fed will rise rates. Where do you see a strengthening Euro??
At least the high degree of gamblers against the Euro and counter measures against a rising USD can cause uncertainty, imo.
^ All of that downside is priced in. And the USD has little downside priced in. Assuming some shit happens jn both places, as it most often does, long EUR.
Sure, a lot of that stuff is priced in, you just have to consider the existing rate differential between Treasuries and Bunds of 10Y maturity. But the pace of Fed´s rate hikes is as unknown as the terminal rate, which undoubtedly will influence currencies. As I said there´s also downside to USD, due to speculative positions…
German 30 year bund is 1.42%. Japanese 30 yr at 1.40%. Quite amazing. The market is pricing Europe just like Japan now.
US 10yr will be at 1.75 before Christmas next year. 