1- “We don’t think EUR/$ will go much above 1.1450 in the event of scenario (i);
2- conversely, scenario (iii) would likely see substantial EUR/$ downside,
we pencil in a 5 big figure instantaneous drop in EUR/$ on announcement and then a continued sharp move lower in subsequent weeks (parity would not be out of the question),
not least since Grexit would represent a severe deflationary shock, to which the ECB could well respond with additional easing;
3- we see scenario (ii) as solidly in the direction of EUR/$ lower, with a drop of something like 2 big figures on ELA suspension and a continued drift lower in subsequent weeks,”
Conclusion:
“In short, we see risk-reward tilted firmly to the downside for EUR/$ from here….Our central case is that a compromise will be found, whereby we end up in scenario (i).
But the governance problems in the Euro area and the resulting growth crisis remain, which we think is the debate Europe (and markets) should be having,” GS concludes.
2- conversely, scenario (iii) would likely see substantial EUR/$ downside,
we pencil in a 5 big figure instantaneous drop in EUR/$ on announcement and then a continued sharp move lower in subsequent weeks (parity would not be out of the question),
not least since Grexit would represent a severe deflationary shock, to which the ECB could well respond with additional easing;
3- we see scenario (ii) as solidly in the direction of EUR/$ lower, with a drop of something like 2 big figures on ELA suspension and a continued drift lower in subsequent weeks,”
Conclusion:
“In short, we see risk-reward tilted firmly to the downside for EUR/$ from here….Our central case is that a compromise will be found, whereby we end up in scenario (i).
But the governance problems in the Euro area and the resulting growth crisis remain, which we think is the debate Europe (and markets) should be having,” GS concludes.
No comments:
Post a Comment