The Swiss National Bank and the German courts have changed the outlook for the euro - but it's still cloudy.
You would think that a determined Swiss National Bank and a German court rejecting Greek bailout protests would help the euro. And it did. But don't expect the good times to last, says Simon Derrick, chief currency strategist at Bank of New York Mellon.
"The events of the last day or so are quite telling," Derrick told me. Yes, there was a spike in the euro against the Swiss franc, but it "almost instantly went back down," he points out.
"For me, this is just another bit of a chip in the euro dollar story," Derrick continues. He points out that the court ruling also requires Parliamentary review of any future bailouts, and with 70% of the German public opposed to bailouts, approval could be tricky. Also, he expects relatively dovish comments at the European Central Bank's press conference Thursday. "We're going to walk in one day and the euro is going to be significantly lower."
Derrick thinks the euro could finish the year "in the high $1.20s or low $1.30s" against the dollar, and he recommends buying the dollar against the euro at current levels.
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