CICC News on September 29 , the latest forecast released by HSBC on Monday (September 28) shows that the euro against the US dollar may rise to 1.20 by the end of next year, because the European Central Bank (ECB) finds it impossible to press its Expand the scale of quantitative easing (QE) stimulus as desired.
HSBC previously predicted that the euro against the dollar may rise to 1.10 by the end of 2016. HSBC raised its forecast for the euro against the dollar, which is already one of the most optimistic forecasts among major investment banks, with many investment banks expecting the euro to fall below parity against the dollar. HSBC predicted in March that the euro would rise to 1.20 against the dollar sometime in 2017.
HSBC said that for its part, the Federal Reserve (FED) will raise interest rates more slowly than the market expects, which will weaken the appeal of the dollar.
HSBC bucked the trend and raised its forecast for the euro against the dollar at the end of 2016 to 1.20.
David Bloom, HSBC’s global head of currency strategy, said: “Once the market realizes that the U.S. interest rate hike cycle is relatively slow and the European Central Bank will not be too dovish, the euro against the dollar will rise".
Bloom and his team expect the EURUSD to rise to 1.14 by the end of this year, compared with the previous forecast of 1.05. EURUSD is currently trading around 1.1170.
So far this year, the Federal Reserve has delayed raising interest rates, which would be the first since June 2006. The dollar has given up some of its earlier gains as markets postponed a rate hike.
In March this year, the euro fell to a 12-year low of 1.0450 against the dollar, prompting many banks to expect the euro to fall below parity against the dollar. However, Bloom and his team, on the contrary, believe that the euro's decline is over and a rebound is imminent.
The euro rebounded against the U.S. dollar in August, rising above 1.17. However, expectations that the European Central Bank will be forced to expand the 1 trillion euro QE program after September next year are increasing, and the euro has subsequently fallen back against the U.S. dollar.
The European Central Bank's QE program is complex. It can only purchase certain types of bonds at certain levels, is limited to purchasing a certain proportion of national bonds, and does not purchase bonds with negative yields, excluding a large number of eligible bonds.
HSBC said: "These rules govern the policy of the European Central Bank. The European Central Bank will find it difficult to ignore or avoid these rules."
☞WeChat public account: cngold-com-cn (long press to copy), haven’t seen enough? Get more free information pushed in real time!
