Euro seen close to $1.50 for next six months
Wed Nov 4, 2009 12:23pm EST
By Nigel Davies
LONDON (Reuters) - The euro could well gather momentum again toward the end of the year should equity market sentiment move north again and see off a recent dollar run, a Reuters poll found on Wednesday.
The euro cruised to a 14-month high to the dollar in mid-October only to make a speedy retreat as more signs of economic recovery were seen in the United States.
A slide in equity markets also saw the euro knocked further as falling risk appetite hit the single currency and the dollar jumped to a one-month high against a basket of currencies.
But analysts in a monthly survey said it would not likely budge far from the $1.50 mark for many months, and 33 of 69 said it would hit that level or higher in just three. That compared with 23 of 63 last month. For full poll data click on
The euro was seen holding its upper hand against the dollar for now, but the survey also showed it would be a long time before the greenback lost any of its stand as the world's leading reserve currency.
For now, most said the euro was caught in an ongoing balance between risk aversion and risk appetite.
"In the very near term a test toward $1.45 is possible, but, as long as the Fed maintains interest rates at historical lows and Wall Street regains a healthy tone, EUR-USD should return on a bullish trend," said Roberto Mialich at UniCredit.
The dollar was not forecast to gain any serious ground to the euro for many more months, or at least until the U.S. Federal Reserve decides the time is right to raise rates. A decision and statement later Wednesday from the Fed should confirm that will not come for some time.
Equally rate decisions on Thursday from the European Central Bank and Bank of England will more than likely deliver no change to record low rates.
But the survey showed the euro slipping back to $1.44 to the dollar in a year's time, in line with separate polls which show the Fed raising rates in the second half of next year.
Euro strength, or dollar weakness, will not likely be a major issue when Group of 20 financial leaders meet in Scotland this weekend, even if foreign exchange rates may be discussed in relation to rebalancing the world economy.
European Union commissioner for the economy Joaquin Almunia called last week for coordination on exchange rates between economies to avoid volatility.
The survey showed euro/dollar volatility picking up in the next month. <VOL/POLL> |
