FXStreet (Barcelona) – The uncertainty over Greece will remain negative for the Euro, but the expected Fed rate hike will drag EUR/USD to 1.00 and USD/JPY to 126 by 2015-end, according to Taisuke Tanaka, Strategist at Deutsche Bank.
Key Quotes
“Greek voters decisively rejected the European bailout offer in yesterday’s referendum. If Greece leaves the euro (“Grexit“), it could face serious economic troubles over the long term. Still, we see limited systemic risk for peripheral nations and the eurozone as a whole.”
“The uncertainty over Greece is likely to be negative for the euro for now. General risk-off sentiment and the impact of Europe’s woes on Fed rate hike speculation could boost the yen. The nervous behavior of Chinese stock markets could also strengthen the risk-off mood.”
“However, market participants had plenty of time to prepare for the Greek drama. Also, Chinese authorities are taking measures to shore up share prices. Once the Greek situation becomes clearer, we believe USD/JPY and EUR/USD will move again in line with the outlook for a Fed rate hike, i.e., a strong dollar.”
“If US economic indicators through 3Q are consistent with growth of around 3%, as we predict, it should heighten market expectations of a rate hike within the year. Our end-2015 forecast is a USD/JPY of ¥126 and EUR/USD of $1.00.”
(Market News Provided by FXstreet)