Goldman Sachs says the euro may fall up to 10 US cents as the European Central Bank is set to increase currency weakening stimulus to meet its inflation target.
The investment bank predicts the ECB will maintain quantitative easing at its current rate of €60 billion a month through the end of 2016, an extension of the plan that was intended to run until September 2016, and only end it completely in mid-2017.
"This represents a material upsizing of the original program and should weigh on the single currency," Goldman Sachs analysts, including Robin Brooks, chief currency strategist in New York, wrote in a report dated September 20th. "Depending on how credible an upsizing to ECB QE is, we therefore see scope for euro to fall between six and 10 big figures," they wrote, referring to a drop of six to 10 cents.
The shared currency gained 0.2 per cent to $1.1320 as of 12:25 p.m. in Singapore after slumping 1.2 per cent on Friday, the biggest decline since Aug. 26. The euro was little changed at 135.55 yen. The dollar fell 0.2 per cent to 119.74 yen.
Bloomberg
