17 Mar 2015
EUR/USD target at 0.95 – RBS
FXStreet (Barcelona) - David Simmonds of RBS, expects that the scale of ECB’s QE would be much bigger than what markets have discounted for, and hence forecasts EUR/USD to fall to 0.95 by Q1 16.
Key Quotes
“Our forecast is for yet further EUR weakness ahead. Key to understanding the ECB policy outlook from here is inflation. Global dis-inflation pressures are still strong: there is too much capacity in the world to produce too much product for the tepid level of final demand that prevails.”
“Japan has been proactive in exporting its deflation problem to the rest of the world via the collapsed yen and Europe must try yet harder to do the same.”
“Noteworthy at the last ECB meeting were the upward revisions to 2016 and 2017 inflation forecasts. With a 2017 CPI forecast of 1.8%, the central bank thinks current policy intentions gets them back to mandate.”
“We do not share ECB optimism in this respect and we believe the scale of ECB QE may ultimately be much bigger than markets have yet discounted. If so, then the EUR should weaken quite a lot further. Our EUR/USD target is revised down to 0.95.”
Key Quotes
“Our forecast is for yet further EUR weakness ahead. Key to understanding the ECB policy outlook from here is inflation. Global dis-inflation pressures are still strong: there is too much capacity in the world to produce too much product for the tepid level of final demand that prevails.”
“Japan has been proactive in exporting its deflation problem to the rest of the world via the collapsed yen and Europe must try yet harder to do the same.”
“Noteworthy at the last ECB meeting were the upward revisions to 2016 and 2017 inflation forecasts. With a 2017 CPI forecast of 1.8%, the central bank thinks current policy intentions gets them back to mandate.”
“We do not share ECB optimism in this respect and we believe the scale of ECB QE may ultimately be much bigger than markets have yet discounted. If so, then the EUR should weaken quite a lot further. Our EUR/USD target is revised down to 0.95.”