ECB to keep euro weak

Better-than-expected economic data from the US and a strong rhetoric by the chief economist and members of the Governing Council of the ECB will keep the euro undervalued.

The Chinese market turmoil led to speculations that the US Federal Reserve might postpone its first rate hike into 2016, arguing for a less divergent interest-rate path between the US and the eurozone and pushing the euro higher.

We believe that a US rate hike later this year is still in the cards. Moreover, recent rhetoric by the ECB underpins that the ECB has a strong bias to keep the euro weak. We revise our EUR/USD forecast slightly downwards to 1.14 and 1.18 in three and twelve months, respectively.

 

Stephanie Lindeck is economist at Julius Baer

 

ABOUT THE AUTHOR
Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 16 years he has been based in London writing about funds and investments . From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope.

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