Seemingly the expectations for the common currency are not looking any brighter according to some analysts, where the bearishness is likely to be the dominant sentiment. According to Standard Chartered the known strategists in the industry and famous to be one of the most accurate foreign-exchange according to the past six quarters ending in September, the euro is likely to extend its worst performance since 2005 into the coming year as the sovereign debt crisis weighs on economic growth.
According to a survey by Bloomberg, Standard Chartered Plc forecasted the euro will depreciate to less than $1.20 by mid next year from around $1.33 areas today.
Callum Henderson, Standard Chartered's global head of foreign-exchange research in Singapore said We're going to get a continuation of the problems that Ireland, Portugal, Spain and others are suffering. According to Henderson, the fact that the nations are within the block and burdened with huge debt, budget and current account deficit, they are further tied by the common currency as they are not capable of maneuvering on their own with the sovereignty of central bank or currency and accordingly he sees the only way out of the crisis is to have a significant recession.
Still hesitance is seen among the majority of forecasters, where the outlook for the Feds QE to weigh on the dollar and the instability in the euro area and the belief that the EU will not allow any nation to fail is practically adding more volatility. Were according to a Bloomberg survey the median mid-2011 estimates for 41 strategists rose to $1.36 from $1.35 and we personally see that the prospects for a weaker dollar had a great impact on affecting those expectations for now.