Forex Video : Euro Dollar Mid Term outlook

ACM Advanced Currency Markets Chief Market Analyst Peter Rosenstreich answers questions about the Euro Dollar mid term targets

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Name: Peter Rosenstreich
Position: Chief Market Analyst
Company: AC Markets
Date: 28/08/08
Time: 10:54 CET
Channel: CNBC Europe
Duration: 2 mins 10 secs

Interview with Peter Rosenstreich

Louisa Bojesen
On to our currency markets. We’re seeing the Dollar currently trading just slightly lower against the Euro, the Euro at 1.4756. Dollar/Yen also seeing some movement. Peter Rosenstreich is Chief Market Analyst at Advanced Currency Markets, and he joins us. Peter, let’s kick off with these hawkish tones coming out of the ECB: Axel Weber, the ECB Executive Board Member, Lucas Papademos, the ECB Vice President both indicating that the ECB isn’t going to be cutting rates. Is this just more reason now to continue to push the Euro higher once again?

Peter Rosenstreich
No, I think what they’re trying to do is, through verbal intervention, anchor interest rate expectations and allow them to buy a little more room and not worry about interest rate expectation out-strapping their monetary policy. I wouldn’t put too much credibility; it’s just words. It looks like the fundamentals are lining up for the ECB to go lower, roughly 45 basis points in OIS swap markets already priced in. It looks like we’re moving in that direction, so we have to take this hawkish rhetoric with a grain of salt.

Brian Shactman
The assumption is, Peter – first of all, how are you doing? It’s Brian here in the US.

Peter Rosenstreich
Good, good.

Brian Shactman
The assumption is that would lead to a bit of a stronger Dollar, especially if the Fed stands pat or even hikes at some point. We haven’t talked to you in a while. What are your mid-term targets here for Euro/Dollar?

Peter Rosenstreich
Well, we’re relatively bullish on the Dollar, and we think the next level for the Euro/Dollar is going to be the 1.40. Back to what I was saying about what’s already priced in, roughly 45 basis points in the OIS swap market for the ECB is already priced in. They need to go to about 3%, so there’s room to move on the down-side. We’re expecting a good GDP number coming out of the US, a miracle number considering all the headwinds that the US economy is up against. Fundamentally, everything is lining up. There are a few X-factors out there such as yield and commodity prices, but barring any significant incident, we see the 1.40 as our next major target.

Louisa Bojesen
Peter, thank you so much. Peter Rosenstreich, Chief Market Analyst from Advanced Currency Markets.

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