With the Greek problem in the middle of the EU debt crisis, and the Fed reaffirming its intention to raise interest rates before the end of the year, the market focus again at the foreign exchange market and in the debate on whether there will be no parity between the euro and the dollar in the coming months. Thus, the analysts had revised, before going on holiday with their bets intention, to prepare for an exciting second half of the year. So, last week BNP Paribas, Macquarie Bank and Saxo Bank adjusted its forecasts for the greenback at its junction against the euro. While the first two put it at 1.04 by the end of September, Saxo Bank sees it at $ 1.02 per euro and predicts that parity will be reached in December and even the euro will fall below the dollar at start 2016.
In the same vein analysis BBVA is and why experts Spanish bank made their forecasts before the solution of the Greek crisis and the last appearance of Fed President Janet Yellen, so you can not excluded that in the next few days reviewing its downward from the level of $ 1.02 they give for the third quarter and from 1.01 for the quarter. Not surprisingly, “the approval of the plan of Greece should help a new sell-off in the euro-dollar pair broke out,” says John Hardy, head of currency strategy at Saxo Bank. So, after European leaders reached an agreement in extremis on Monday last week and the Greek Parliament approved the austerity measures demanded from Europe to receive a third rescue allowing them to avoid default, the sense of relief is allowing investors look abroad increased investment opportunities, which could encourage the opening of new short positions in carry trades debt-operate in taking advantage of low financing costs, extraordinary character and financed euros.
Divergence between central banks to attract corporate profits
“The new seller enthusiasm could return after cautious view short positions after the episode of Greece, supported also by the injection of liquidity through quantitative easing program launched by the ECB, which will help to focus attention focus back on the divergence of central bank policy and the slow path of US Federal Reserve to raise interest rates when, “says the expert.
And it is that while the institution he presides Mario Draghi is mired in the program of buying bonds totaling one billion euros to September 2016, in the US, if the economy continues to provide good data, the rise could occur this December same or even if the stakes of some members of the market are met, as early as October. You cannot lose sight of the repatriation of corporate profits by the United States. On the other hand, Hardy highlights an aspect that adds to these two to play in favor of the dollar, which has so far gone unnoticed. This is the repatriation of corporate profits by the United States. Not surprisingly, more than 2 billion US multinational earnings are abroad due to the US tax system, which requires the taxation of foreign profits already taxed, which means that these revenues are not sent back home unless there are special tax breaks that encourage companies to bring that money back home, “explains the expert.
And that deal could come sooner than later … seems to be taking shape in Congress a possible solution to this issue. Anyway, the fact is that the euro has fallen to its lowest level in the last three months and moves in the vicinity of $ 1.08, while the market consensus stands at 1.08 at the end in September and $ 1.05 per euro in the face at the end of the year, according to Bloomberg data.