8 Jul 2015
EUR/USD expected to see parity by 2015-end – BofA
FXStreet (Barcelona) - Athanasios Vamvakidis, Strategists at BofA-Merrill Lynch, expects the projected September Fed rate hike, low Eurozone inflation and ECB’s QE to push EUR/USD towards parity by 2015-end.
Key Quotes
“Life has not been easy for Euro bears. Shorting the Euro was a "widow-maker" in the years before May 2014. It was one of the best FX trades from May 2014 to March 2015. And it has been going nowhere since then, with EUR/USD stuck in a narrow range. More recently, the Euro has remained relatively resilient, despite a substantial deterioration of the situation in Greece.”
“We argue that although Grexit risks are negative for the Euro, data and divergence of monetary policies are more important drivers. We project EUR/USD at parity by the end of the year, expecting the first Fed rate hike in September and low Eurozone inflation to keep the ECB's QE commitment strong. Greek risks, negative Bund net supply and light positioning also pose short-term EUR risks.”
Key Quotes
“Life has not been easy for Euro bears. Shorting the Euro was a "widow-maker" in the years before May 2014. It was one of the best FX trades from May 2014 to March 2015. And it has been going nowhere since then, with EUR/USD stuck in a narrow range. More recently, the Euro has remained relatively resilient, despite a substantial deterioration of the situation in Greece.”
“We argue that although Grexit risks are negative for the Euro, data and divergence of monetary policies are more important drivers. We project EUR/USD at parity by the end of the year, expecting the first Fed rate hike in September and low Eurozone inflation to keep the ECB's QE commitment strong. Greek risks, negative Bund net supply and light positioning also pose short-term EUR risks.”