As Euro Slides, Strategists Cut Forecasts
Rip up your euro forecasts.
A day after the European Central Bank unveiled its bond-buying program, the single currency still was in free fall, blowing past analysts’ expectations for how low the euro can go.
Some investors now say the euro could fall to the point where it is on equal footing with the U.S. dollar for the first time since it climbed above the buck in late 2002.
“If you would have asked me a few months ago, I would’ve said that parity could be in the cards in the years ahead. Now, we can’t rule it out anymore even by the end of this year,” said Thomas Kressin, head of European foreign exchange at Pacific Investment Management Co., or Pimco, which has $1.68 trillion under management.
Late Friday in New York, the euro fell 1.4% against the dollar, to $1.1206, on top of a 2.1% slide the day before. It is now down 7.4% against the dollar since the turn of the year and is at its lowest point in more than 11 years.
Morgan Stanley cut its estimate of where the euro will end 2015 to $1.05 from $1.12 previously. Bank of America Merrill Lynch sees the euro now falling to $1.10 by the end of the year, from $1.20 in an earlier forecast, while HSBC Holdings PLC analysts cut their year-end expectation to $1.09 from $1.15.
The downgrades have echoed Wall Street’s failure to predict outsize pullbacks over the past year in global government-bond yields and oil prices. Those declines have increased investor unease over the risks facing the global economy.
Some Investors See Single Currency Falling to Parity With U.S. Dollar
Rip up your euro forecasts.
A day after the European Central Bank unveiled its bond-buying program, the single currency still was in free fall, blowing past analysts’ expectations for how low the euro can go.
Some investors now say the euro could fall to the point where it is on equal footing with the U.S. dollar for the first time since it climbed above the buck in late 2002.
“If you would have asked me a few months ago, I would’ve said that parity could be in the cards in the years ahead. Now, we can’t rule it out anymore even by the end of this year,” said Thomas Kressin, head of European foreign exchange at Pacific Investment Management Co., or Pimco, which has $1.68 trillion under management.
Late Friday in New York, the euro fell 1.4% against the dollar, to $1.1206, on top of a 2.1% slide the day before. It is now down 7.4% against the dollar since the turn of the year and is at its lowest point in more than 11 years.
Morgan Stanley cut its estimate of where the euro will end 2015 to $1.05 from $1.12 previously. Bank of America Merrill Lynch sees the euro now falling to $1.10 by the end of the year, from $1.20 in an earlier forecast, while HSBC Holdings PLC analysts cut their year-end expectation to $1.09 from $1.15.
The downgrades have echoed Wall Street’s failure to predict outsize pullbacks over the past year in global government-bond yields and oil prices. Those declines have increased investor unease over the risks facing the global economy.
