LIVE MARKETS-New year, new euro low?
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NEW YEAR, NEW EURO LOW?
Google searches for "euro parity" blipped up to a six-week high last week, according to Google Trends, after the European Central Bank cut interest rates as expected, but offered mixed signals on how quickly it might lower borrowing costs next year.
Two weeks ago, investors were sitting on their largest bearish bet against the euro since March 2020 - worth $9.94 billion. They have since pared that back to $8.64 billion. Just three months ago, investors were holding a bullish bet on the euro worth over $25 billion, offering a sense of how much sentiment has shifted towards the single European currency.
The euro hit a 14-month high against the dollar above $1.21 on Sept 25. It's since fallen about 7% and is on course for a drop of 5.6% this year, but, taking a look at how the euro has performed against other major currencies this year, this decline is a function of dollar strength than pure euro weakness.
Against the pound EURGBP=D3, the euro has fallen 4% and 3% against the offshore Chinese yuan EURCNH=D3, but it's risen 12% against the Mexican peso EURMXN= and nearly 6% against the yen EURJPY=EBS.
At around $1.04, the euro is some way off parity still, but it's not a million miles away at this point.
Mizuho head of macro strategy Jordan Rochester said in an interview with Bloomberg TV earlier this week he would be looking out for any sign that the incoming U.S. administration is planning a consultation into applying tariffs to major trading partners, as President-elect Donald Trump has vowed. Rochester says tariffs mean market momentum favours the dollar right now and the euro could see a break to $1.01 or even parity if Trump trains his sights on Europe in the first instance.
(Amanda Cooper)
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FRIDAY'S OTHER LIVE MARKETS POSTS:
CHINA TAKING "WHATEVER IS NECESSARY" APPROACH CLICK HERE
STOXX 600 INCHES UP IN HOLIDAY THINNED TRADING, DELIVERY HERO FALLS CLICK HERE
EUROPE BEFORE THE BELL: FUTURES TICK UP AT END OF HOLIDAY-DISRUPTED WEEK CLICK HERE
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