Euro: Upside in the offering - ING

James Knightley, Chief International Economist at ING, suggests that they are expecting to see 1.40 level for EUR/USD at some point of time in 2019.

Key Quotes

“We were talking a very positive EUR/USD story. The combination of "good" dollar weakness (global growth warranting stronger currencies) turning to bad dollar weakness (Trump’s protectionism, Steve Mnuchin’s suggesting a weaker dollar can be a good thing, rising deficits) coupled with a positive euro story - rebounding portfolios into the euro area, FDI flows relating to Brexit (people switching from investing in the UK to the Eurozone) and the 3%+ Eurozone current account balance.”

“Our suggestion that we could see 1.40 at some point in 2019 caused a few awkward squirms, but there was an acceptance that it wasn’t a completely mad call – we were there only 4 years ago. Latam financial institutions were increasingly switching from US to European assets. They were negative on the USD and were fully backing the stronger EUR call and stronger JPY view.”