Ulrich Leuchtmann, analyst at Commerzbank, suggests that their Fed watchers are expecting that the US central bank might hike its key rate twice next year before ending its rate hike cycle – so that the final target range for the Fed Funds rate will be around 2.75%-3%.
Key Quotes
“Our ECB watcher expects that the ECB will still not hike interest rates in 2019. The deposit rate is likely to remain at -0.4% well into Q1/2020. Relatively high (and even surprisingly high) US interest rates and still no end in sight of the negative interest rate environment in the euro zone (not even a beginning of the end): at first glance the parameters for our EUR-USD forecast seem to be pointing towards lower EUR-USD levels. The fact that we nonetheless forecast a EUR-USD exchange rate at 1.22 at the end of 2019 (approx. 7% above current levels) seems inconsistent with these parameters.”
Share
