© Adam Cole
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We expect the Euro continues to fall in Q1 of next year. Though, it falls against the Dollar larger, since the greenback is rising more broadly. Independently, we are much less negative on the Euro and expect it trade with the much more mixed spectrum on the crosses. Thus, our expectations are driven by the general Dollar gain against most of its major currencies.
What will be the main drivers for the Euro during the fourth quarter of this year?
We assume that the Eurozone drivers are quite neutral. Although, expectation for the ECB QE particularly with sovereign bounds is going to be a major factor, we believe the market is now largely taken on board. The ECB will move to include sovereign bonds in its asset purchases. The surveys indicate that we have moved to around the 77% probability of that now. Thus, we assume it does move up towards 100% in Q1, but any damage done to the Euro with mostly already happened.
What are your forecasts for the EUR/USD, EUR/AUD and the EUR/GBP for the fourth quarter of this year?
We expect the EUR/USD trading down to around 1.20 levels. The EUR/GBP we expect to see at 0.80 in the Q1. And talking about the EUR/AUD currency pair, we can see it rolling up to 1.46 levels.