Euro worse to come as Trichet fails to ease the crisis, meteorologists Top Di

The most accurate currency strategists say that the euro is the worst annual performance since 2005 was extended until next year as the crisis of sovereign debt in the region undermines economic growth.

Standard Chartered Plc, the forecaster superior general of the six quarters ended September 30 from data compiled by us predicted that the euro may weaken to less than $ 1.20 in mid-2011 of $ 1.3352 today. Westpac Banking Corp., the second most accurate is "bearish in the short term," and No. 3 Wells Fargo & Co. cut its forecast at the end of last week.

The currency of 16 nations first weekly gain against the dollar from 05 November may be short-lived amid growing concern that more nations will need bailouts. The European Central Bank President Jean-Claude Trichet, delayed the final of emergency stimulus measures last week and increased purchases of public debt as "acute" market tensions led the Spanish bond yields and Italians at the highest levels in relation to German bonds since the euro began in 1999.

"We will have a continuation of the problems that Ireland, Portugal, Spain and others are suffering," said Callum Henderson, head of Standard Chartered currency research in Mexico. "The bottom line is these are countries with relatively large debt, large budget deficits, current account deficit, which does not have its own currency and can not reduce interest rates. The only way out of this is to have a significant recession. "

Sentiment Reverses

Ireland's budget deficit will rise to over 32 percent of gross domestic product this year, including the cost of rescuing the country's banks, European Commission data showed on November 29. Spain's deficit will be 9.3 percent in 2010. total debt of Portugal, will reach nearly 83 percent of GDP this year from about 76 percent in 2009, according to the commission.

Just last month, the euro reached $ 1.4282, the strongest level since January, as traders sold the dollar on speculation the Federal Reserve lowers the dollar by printing more money to purchase $ 600 billion Treasury bonds called quantitative easing.

Now, those concerns are being overshadowed by the possibility that the European economy slows next year as governments impose austerity measures to reduce the budget deficit, while officials unit bond investors away with talk of force them to take losses as part of future bailouts.

Risk Investment

The demand for options granting the right to sell the euro over the next three months in relation to procurement that achieves the highest level since June last week. The hazard rate of investment called Delta fell 25 percentage points negative 2.5225 0.5725 negative in October.

European banks pay the highest premium dollar loans through the swap market since May of last week, a sign the outlook for the euro may deteriorate. The price of swaps every two years between exchange between euros and dollars reached at least 51.8 points on 01 December, from minus 20.9 the 4th of November.

"We have plenty of time to go" before the European situation is resolved, John Taylor, president of FX Concepts LLC, the world's largest currency hedge fund, said on 02 December in funds New York hedge Link Conference organized by us. "That means that the market will be shaken."

Taylor predicted some nations may leave the common currency. stronger members "have to say enough, guys, leave the euro," he said. "The risk that Spain and Italy will get into trouble will cause the euro to become very weak."

The region's economy may expand 1.4 percent next year compared with 2.5 percent in the U.S., according to the median estimate of more than 20 economists in surveys.

"Market Tensions

"The uncertainty is high," Trichet told reporters after the ECB left its benchmark interest rate by 1 percent to 2 December. "We have tensions and we have to consider."

The ECB will keep the banks that offer as much money as they want in the first quarter for up to three months at a fixed interest rate, Trichet said. That marks a change from last month, when he said the ECB could begin to limit access to their funds.

While the euro rose 1.3 percent against the dollar last week, is 5.6 percent below November 4. For the year, has fallen by 6.8 percent after a gain of 2.51 percent in 2009.

Westpac predicts the euro may weaken to $ 1.2650, $ 1.2670 in one month, said Lauren Rosborough, senior currency strategist in London. The bank expects the Fed's plan with option to buy bonds to weigh on the dollar, according to Robert Rennie, chief analyst at Westpac in Sydney.

'Source of negativity "

"As we move into next year, we see the quantitative easing in the U.S. as a continuous source of negativity to the U.S. dollar," said Rennie. "We have the euro to $ 1.35 in March and $ 1.38 in June."

Unlike the Fed, the ECB is not carrying out quantitative easing. That helped keep the euro from this year's game reached low of $ 1.1877 on June 7.

Outside the most accurate forecasters, strategists do not dare to reduce their estimates. Although the euro fell 6.9 percent last month, the median estimated mid-2011 of 41 strategists surveyed by us rose to $ 1.36 from $ 1.35.

Germany is doing to some of the weakness of the economies of Greece, Ireland, Portugal and Spain. Last week, the Nuremberg-based Federal Labor Agency said the number of unemployed Germans fell a seasonally adjusted 9.000 to 3,140,000, the lowest level since December 1992. German business confidence rose to a record in November as domestic spending increases, the Ifo institute in Munich said on 24 November.

Trichet signal

Trichet said Nov. 30 that investors are underestimating the determination of policy makers "to bolster stability in the region. He said in Paris on December 3 that the governments of the euro area needs a" quasi "fiscal union.

"There will be enough political will to find measures that bind the system together," said Jane Foley, senior currency strategist based in London at Rabobank International, one of the most bullish on the euro among the most accurate forecasters. "The euro's out of this stronger."

Foley said the euro will strengthen to $ 1.40 in the first quarter and $ 1.45 in late June.

Traders are anticipating further declines as the U.S. economy accelerates.

Diverging economies

U.S. jobs created in November for the second consecutive month, the Labor Department data showed in Washington Dec. 3. Two days earlier, the Institute for the factory index for Supply Management showed manufacturing expanded for a month 16. By contrast, GDP growth in Europe slowed to 0.4 percent in the third quarter from 1 percent in the three months ended June 30, according to figures from the EU on December 2.

While most indebted nations in the euro region to cut spending to bring their deficits under control, a weaker euro will be needed to protect their economies, said Ian Stannard, senior currency strategist in London at BNP Paribas SA, the fifth most accurate predictor . The bank said the euro trading at $ 1.25 in late June and $ 1.20 in the third quarter.

The reduction of the link members of the euro zone, including Ireland and Spain have accelerated after EU leaders agreed on 29 October to consider the proposal of German Chancellor Angela Merkel, to force bondholders to share the cost of the bailouts in the future.

Wells Cortes

The crisis prompted Wells Fargo to reduce its target for the first quarter of the euro to $ 1.37, $ 1.38 against the November forecast of 1.41 dollars, said Nick Bennenbroek, chief currency strategist in New York. He sees the currency at $ 1.25 by end of next year.

The debt crisis "will remain with us for longer, so we lower our goals," he said. "The movement in the euro has been particularly rapid and can say that the currency markets have pushed the panic, so I feel it is exaggerated. We expect the euro to fall over time, but we expect the decline to be more orderly than has been the case recently. "

Companies participating in the ranking were compared on the basis of seven criteria: six forecasts at the end of each quarter to the end of the next, from March 2009, plus an annual estimate that was made in late September 2009 for the exchange rate as September 30, 2010.

Only companies with at least four forecasts of a currency pair qualified for it, and only those who qualified in at least five of the eight pairs were included in the ranking of the best general predictors.