(Bloomberg) -- Add Societe Generale SA to the list of major banks adjusting 2020 forecasts for the world's most-traded currency pair as the coronavirus upends expectations for the global economy.
In a note Thursday, the French bank lowered expectations for euro strength, revising its year-end forecast down to $1.16, from $1.20. The euro is one of the weakest major currencies this month, slumping 2.7% amid concern that the virus will undermine an already sputtering European economy. The euro sank as far as $1.0778 Thursday, a level unseen since 2017. Coming into this year, the consensus was for it to appreciate against the dollar in 2020.
Growth expectations have weighed on the shared currency, and the “coronavirus crisis isn't helping with the euro either, with Europe more sensitive than the U.S. to global trade fears,” Kit Juckes, SocGen's chief global FX strategist, wrote in a note to clients. “Our FX forecasts have not had a good start to the year.”
Read more on how euro is getting swept up in the global funding frenzy.
Juckes said he still expects a U.S. economic slowdown, which he projects will eventually weigh on the dollar against the euro this year, although the bank “misjudged the resilience of U.S. expectations about the economy.”
The bank is hardly alone in lowering its euro predictions for various points of 2020 in the wake of the outbreak. ABN Amro Bank NV, JPMorgan Chase & Co., Standard Chartered Plc and Wells Fargo & Co. have also revised 2020 euro calls.
SocGen noted the virus has also upset expectations for the yen and other Asian currencies. The bank shifted its year-end forecast for the yen to 100 per dollar, from 98 previously. The dollar traded at about 112 yen on Thursday, close to the strongest since April.
To contact the reporter on this story: Jack Pitcher in New York at jpitcher2@bloomberg.net
To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Mark Tannenbaum
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