Finance News
By Sakamoto Nashi
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ECB Hesitation vs. Fed Aggression. The ECB's problem is a familiar one. It wants to fight inflation but it's scared of killing what…
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What a Weaker Euro Actually Means. For businesses and consumers in the eurozone, a drop to $1.10 isn't just a number on a screen.
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Policy Pressure Builds on the ECB. If the euro keeps sliding, the ECB faces a tough choice.
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Capital Economics is calling it. The research firm sees the euro falling to $1.10 against the U.S.
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The firm points to two big forces working against the euro simultaneously. First, the eurozone economy is slowing down — manufacturing and services activity have both weakened,…
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The divergence between the two central banks is the core of this story. When one central bank tightens aggressively and another holds back, the currency of the more aggressive…
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Capital Economics didn't get comments from the ECB or any other financial institution on these projections. The ECB hasn't publicly addressed the $1.10 forecast specifically.
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See also: Supreme Courts 5-4 Vote Keeps Fed Governor Lisa Cook in Place
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The trade picture is more mixed. Eurozone exporters could actually benefit. When the euro falls, European goods get cheaper for foreign buyers, which can boost export volumes.
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So the net effect for the broader eurozone economy? Murky. It's not a clean win for anyone.
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Financial markets are watching the euro-dollar rate closely, and for good reason. Currency moves at this scale shift investment strategies, affect corporate earnings forecasts,…
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If the euro keeps sliding, the ECB faces a tough choice. It can accept a weaker currency and deal with the inflationary fallout, or it can accelerate rate hikes and risk choking…
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Read also: Natixis Calls Peak on Dollar Rally, Tells Clients to Sell USD Now
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Capital Economics sees that gap staying wide. The Fed's commitment to rate hikes isn't going away fast, and the ECB's caution isn't either.
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Some market participants might see opportunity in all of this. A weaker euro can open doors for European exporters in global markets, and currency dislocations sometimes create…
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