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The Euro maybe sold all the way to $1.15 says Royal bank of Scotland

Fri, Feb 13 2009, 09:40 GMT
by Benny Menashe

Finotec Group Inc.  |  View company's profile

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Investors should sell the euro against the dollar and the yen, according to Royal Bank of Scotland Group Plc. Bet the euro will drop to $1.15 and end the trade if the European currency strengthens above $1.309, Royal Bank of Scotland analysts said in a report today. The euro may decline to 100 yen and investors should halt the transaction if it rises above 120 yen, Royal Bank of Scotland said. The shift now in these relationships shows how the greenback is benefiting further from risk aversion and slumping global growth this year,” wrote Mansoor Mohi-Uddin, chief currency strategist at UBS in Zurich, in a research note today. The EUR/USD is currently trading at $1.2915 as of 8:40am, GMT.

The yen dropped against the euro and the U.S. dollar as optimism about government efforts to revive global growth improved investors’ appetite for riskier assets, pushing up Asian stocks for the first time this week. “Risk aversion is gradually easing,” said Akio Yoshino, chief economist at Societe Generale Asset Management Ltd., citing indicators including Asian equities and the VIX volatility index, a gauge reflecting expectations for stock-market price changes index. “This should give investors less reason to buy the yen.” A U.S. economic stimulus bill is headed for passage in Congress after lawmakers agreed on $789 billion to stem the recession through a mix of government spending and tax cuts. The USD/JPY is currently trading at 91.40 as of 8:45am, GMT.

The Australian dollar slid this week on concerns the U.S. stimulus plan will fail to ease a recession in the world’s largest economy. The currencies advanced today as the Australian Senate passed a A$42 billion ($28 billion) economic stimulus package and on reports President Barack Obama will use government money to lower interest rates for struggling borrowers. Gains may be limited by speculation the Group of Seven industrialized nations will discuss exchange rates during a meeting that starts today. “Investors are still worried that the U.S. stimulus might not be enough to revive the economy,” said Besa Deda, chief economist at St. George Bank Ltd. in Sydney. Markets may be “a touch nervous” ahead of the G-7 meeting, pushing the Australian dollar toward 65 U.S. cents and New Zealand’s may trade at around 51.60 cents, she said.

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Published on  Fri, Feb 13 2009, 09:43 GMT

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