Euro Update
The Dow Jones News Wires had a very interesting piece speculating on how high the euro may appreciate by the end of the year. This portion really sticks out from the article:
"I don't usually use this word but $2.00 per euro is impossible. That would mean a 40% increase in 7 months and that's unheard of," said Ashraf Laidi, chief foreign exchange strategist at CMC Markets US.
"Oil would have to be well above $200 and some catastrophic event will have to take part in the U.S. politically or economically," said Laidi, who predicts the euro's upside limit as "more like $1.80 max."
What I found interesting was the choice of the word "impossible." That is a word that people often regret saying.
As a meteorologist, I never use the word "impossible" in a forecast discussion due to the chaotic nature of weather. Every weather forecaster has had the unpleasant surprise of going to work the next day and finding out that their entire forecast busted. Even when weather conditions look like a 100% certainty, I use words and phrases such as "likely" or "highly probable. " Economists have similar track records. On any given day on CNBC, you will see ten people talking about a major bear market while ten others feel just the opposite. Granted, a rise of the Euro to $2.00 would require a lot of problems to hit all at once, but anything is possible. After all, how many people thought oil would be up around 80% in just one year? Who would have correctly forecast a global shortage of rice?
So, could the Euro hit $2.00 by the end of the year? My crystal ball says "not likely."
"I don't usually use this word but $2.00 per euro is impossible. That would mean a 40% increase in 7 months and that's unheard of," said Ashraf Laidi, chief foreign exchange strategist at CMC Markets US.
"Oil would have to be well above $200 and some catastrophic event will have to take part in the U.S. politically or economically," said Laidi, who predicts the euro's upside limit as "more like $1.80 max."
What I found interesting was the choice of the word "impossible." That is a word that people often regret saying.
As a meteorologist, I never use the word "impossible" in a forecast discussion due to the chaotic nature of weather. Every weather forecaster has had the unpleasant surprise of going to work the next day and finding out that their entire forecast busted. Even when weather conditions look like a 100% certainty, I use words and phrases such as "likely" or "highly probable. " Economists have similar track records. On any given day on CNBC, you will see ten people talking about a major bear market while ten others feel just the opposite. Granted, a rise of the Euro to $2.00 would require a lot of problems to hit all at once, but anything is possible. After all, how many people thought oil would be up around 80% in just one year? Who would have correctly forecast a global shortage of rice?
So, could the Euro hit $2.00 by the end of the year? My crystal ball says "not likely."