Quantitative Easing has already been announced in the euro-zone and will come into effect in March. This is set to have a wide impact on all markets.
Tom Fitzpatrick at CitiFX sees the euro weakening all the way to parity with the USD and explains:
Here is their view, courtesy of eFXnews:
“A number of European Equity markets look quite constructive at this point. This is consistent with the “post QE” world of the last 6 years or so. A weaker EURO is likely to be supportive of this (As we saw in Japan with the JPY) suggesting that these holdings should be hedged from a foreign investment (USD) perspective.
We remain of the big picture view that EURUSD will continue to push down and head towards parity, if not lower, by year-end.
European Equity Indices as a whole saw important breaks in January which indicate even higher levels are likely in the coming months given”¦
-The positive effect seen in equity assets of countries that engage in quantitative easing.
-A significant portion of earnings come from abroad, making a weaker EURO beneficial to some corporate bottom lines.”
Tom Fitzpatrick – CitiFX
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