•  
  • New York 12:12
  • London 16:12
  • Barcelona 17:12
  • Tokyo 01:12
  • Sydney 03:12

  • SignUp | Login

Weekly Focus

When does the EUR become a problem?

Fri, Nov 16 2007, 16:04 GMT
by Danske Research Team

Danske Bank A/S  |  View company's profile


Vote:

0

0

Since the financial turmoil kicked off in July, EUR has climbed around 8% against USD. We anticipate further gains and reckon that the EUR/USD could break through 1.50 in the next six months. So is the strong EUR becoming a serious problem for European exports and the European economy?

In our view, it is too early to write-off European exports. Although the EUR/USD has been hitting record highs, the trade-weighted EUR has been strengthening much more slowly and it is not yet at especially high levels (see chart). Ultimately, it is currently more appropriate to talk of a weak USD than a strong EUR.

When viewed over the last three to four years as a whole, Euroland’s competitiveness has not actually deteriorated substantially. One important reason is that wage growth has been relatively subdued, and productivity growth quite strong, not least in Germany.

Finally, the US is becoming less and less important for European trade. Over the last five years, the emerging markets of central and Eastern Europe have been more important for growth in Euroland exports than the US market. And Euroland has become more competitive relative to these countries in recent years.

With growing inflationary pressures from oil and commodity prices, we are therefore a long way from the ECB seeing the strong EUR as problematic.

Published on  Fri, Nov 16 2007, 16:06 GMT


Danske Bank http://www.danskebank.com/ | danskeresearch@danskebank.com

Archive


Legal disclaimer and risk disclosure

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Vote:

0

0


Interested in forex trading? forex brokerage firms!


MG Financial Group
Contact the broker/FDM
Open a demo account
FOREX.com
Contact the broker/FDM
Open a demo account
FXDD
Contact the broker/FDM
Open a demo account		CitiFX Pro
Contact the broker/FDM
Open a demo account		Alpari (US), LLC
Contact the broker/FDM
Open a demo account

GET CASH BACK FOR YOUR TRADES!   Learn more about the Pip Rebate Program

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2010 "FXstreet.com. The Forex Market" All Rights Reserved.