Zhitong Finance and Economics learned that according to RBC Global Asset Management's investment outlook for 2024, the euro is expected to be about 10% next year, driven by the general weakening of the US dollar and the gradual return of overseas investment in the euro.
RBC's Dagmara Fijalkowski and Daniel Mitchell wrote in a Dec. 15 note that the euro is expected to appreciate against the dollar to 121, higher than the consensus expectation of 1. in the fourth quarter of 202412。
The US dollar has been weakening since the end of October and extended its decline after the Fed released its quarterly outlook last week. The Fed expects the Fed's interest rate target to be lowered more sharply next year than previously expected. Around the same time, ECB President Christine Lagarde warned that the ECB should not let its guard down when it comes to fighting inflation.
Fijalkowski, Global Head of Fixed Income and Currencies, and Mitchell, Vice President and Senior Portfolio Manager, wrote: "The boost of the US dollar across the board will help the euro, so the euro should strengthen at the end of the year even in the face of a less optimistic outlook for the European economy." ”
On Wednesday, EUR/USD **03% to 10944, but since the beginning of this year, the euro has exchanged more than 2% against the dollar. The U.S. dollar spot index has accumulated around 4% since the end of October.
In addition, according to the RBC report, between 2014 and 2022, about 4 trillion euros were invested outside the eurozone, due to the negative interest rates imposed by the ECB on European depositors at the time, and only a "small part" of funds have returned so far.
Fijalkowski and Mitchell write: "Given that short-term interest rates are 4 higher than they were 18 months ago5 percentage points, we expect demand for the euro to continue gradually as these flows back. This allocation shift will accelerate as Europe's economic outlook improves relative to the United States. ”
They also expect the yen to rise to 130 yen per dollar next year, making it one of the best performers, adding that this is "heavily dependent" on a weak dollar and the Bank of Japan's interest rate adjustments. They expect the pound to climb to 1 against the dollar over the next 12 months, supported by the dollar**31。
"However, for investors to truly embrace the sell-off in the dollar, they need to see increased economic growth momentum in the rest of the world, not just a less severe slowdown," the report said. The direction and magnitude of changes in the dollar are largely driven by economic conditions outside the United States. ”