Euro Taps a $0.973 Low Against the US Dollar, Analysts Claim British and EU Currencies Are Trapped in a ‘Doom Loop’ – Economics Bitcoin News
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On Friday, the euro, the official fiat currency of 19 European Union (EU) 27 member states, fell to a low of $0.9732 against the US dollar. The drop comes at a time when fiat currencies such as the yen, yuan and pound have struggled against the dollar over the past six months. Analysts claim that the pound and the euro are trapped in a “doom loop”, and it has also been said that the US dollar is the “only possible hedge” against a collapsing global economy.
Analysts at Citigroup say the greenback is the only safe haven in this macroeconomic environment
Strange days have found us in the world of finance, fiat currencies, stocks, bonds and cryptocurrencies. As of Friday, September 23, the European Union’s fiat currency, the euro, has struggled against the US dollar, falling below parity as the weekend approaches. The euro is currently trading at $0.97 and fell to a low of $0.9732 during the morning trading session (10am ET). The euro has fallen more than 1 percent against the greenback in 24 hours and is at its lowest level in 20 years.
Bloomberg contributors Sofia Horta e Costa and Ruth Carson recently cited the views of analysts at Citigroup Inc. and Canada’s Imperial Bank of Commerce. “A rising dollar has led many people to believe that the only safe haven is the U.S. currency,” the authors explained last week. The duo received a research note from Citi strategists Jamie Fahy and Adam Pickett, who discuss phenomena related to the US dollar.
“The only place to hide is in US dollar cash,” Citi strategists argue. ‘Deep recession’ lowers inflation, bank funding strategists add. Win Thin, chief currency strategy analyst at Brown Brothers Harriman in New York, says the macroeconomic backdrop appears to favor the dollar. “The Fed’s repricing of tightening risks is likely to keep dollar supply across the board for the foreseeable future,” a Brown Brothers Harriman executive said. A currency strategy analyst at Brown Brothers Harriman continued:
As we said during this latest dollar correction, nothing material has changed and the global backdrop continues to favor the dollar and US assets in general.
TD Securities strategists believe euro and pound stuck in ‘doom loop’
Strategists at TD Securities believe the euro and pound are stuck in a “doom loop” and the firm’s analysts believe the situation could worsen over the next few months. TD Securities strategists working with James Rossiter elaborated on Friday that the doom loop is caused by weak economic growth and rising energy costs.
Analysts at TD Securities believe the pound will fall another 3% from the current position. Rossiter and the TD team say the European Central Bank (ECB) and Bank of England (BOE) can only do so much.
“While both the ECB and the BOE want to slow and eventually reverse this cycle, monetary policy can only limit the slowdown significantly before the coming winter,” currency strategists noted. “Politicians are unable to generate the necessary energy.”
What do you think about the euro falling to $0.9733 against the US dollar and analyst forecasts for the fiat currency? Let us know what you think about this topic in the comment section below.
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