1.0 would take a nearly unprecedented dollar rally, basically reversing the entire 5-year slide since breaking parity in 2002. The chances of that happening, and occurring entirely within a 12-month window (2008), are virtually zero. 1.3 is a much more reasonable target in a large correction scenario (however unlikely).
Few years ago, G. Brown said the best exchange rate for joining the single currency would be at about 73p. If they starts contemplating joining the euro at this level, can you imagine what it would do to USD?
HOBO, how would Sterling joining the Euro have any serious long term effect on the dollar? I don't see it. I think the poll is a bad one to start with. No sane trader would predict a 4 cent move as being less likely than a 50 cent move. & as for all these predictions of Euro strength -remember that you are betting on the backward socialist states of Europe outperforming the modern capitalist economy of America. Right here, if it's not obvious, I'm a Euro bear. & I've put my money where my mouth is with a size long term trade. Over the next few years I expect the Euro to get found out. Remember it wasn't so long ago that the Euro was trading parity...
I tend to agree with the above although I wouldn't make it a political system case, socialism vs capitalism. Your statement is flawed in that no European member country is purely socialist. We do have Northern European countries like Sweden, Denmark and Norway that are based on socialist governments, yet they are not members of the single currency. Hence, the best examples of socialist countries in the world decided to keep their own currency. I believe any form of government can be successful as long as the politicians in charge know how to do their job. I am a long-term dollar bull simply because the US is a single country and is structured to function as a single unit whereas the EU is composed of many different countries with different languages, different fiscal systems, different governments, different economies, etc... When things start to go bad, I would rather have my money invested into a country that is better organized, more structured and quick to tackle problems. I can't see this in the EU so I am sure that as soon as the European economy hits a slump, all of the diversities within it will be exposed and Euro will eventually tank.
That's a fair comment fseitun. It's easy to pick holes in the argument that Europe is socialist on an academic level. It's is easier just to say that the left leaning states of Europe are a lot less efficient, less entrepreneurial and much more reliant on state hand outs and intervention. I remember reading an article which said that certain areas of the UK enjoy higher relative government subsidies than the old soviet bloc did. You can pick holes in the dow stocks but their european counterparts are much less evolved -take two major european stocks Ferrovial and Telefonica and look at how they operate. Perversely these days Trichet stands out as the most credible of central bankers. I don't think it will be long until we get back to the status quo where the ECB is a laughing stock.
This poll was created few montsh ago after breaking the 1.4 barrier and people were wondering if euro will ever see 1.5 in 2008.... 1st week of March 2008 euro is almost 1.54 !!!!!! Anyone still believe in dollar recovery?????? I will count 1.4 a recovery of US dollar