Less than 24 hours after predicting that a “dovish surprise” from European Central Bank President Mario Draghi would send the euro tumbling as much as 3 percent, Chief Currency Strategist Robin Brooks is rethinking his entire weak-euro thesis after the ECB and currency markets moved against him. The euro rallied 3.1 percent to $1.0940 by the close of trading Thursday, the most since 2009, after Draghi delivered a stimulus package that was less aggressive than investors anticipated..$1.08, down a penny last. we'll still see par on the pair but yesterday was absolutely amazing for the violence of the moves.
"Today was not the most fun day I’ve ever had," said Brooks, who’s putting his euro forecasts under review. "What’s clear is the meeting sent a very confusing message."
While most strategists have been calling for a weaker euro, Brooks has been one of the most bearish on Wall Street. Before Thursday, he forecast the euro to fall to parity against the greenback by the end of the year, and $0.95 over the next 12 months. Analysts in a Bloomberg survey predicted the currency to drop to $1.05 by the end of March, and remain steady throughout the rest of 2016.
"We badly misread this meeting," Brooks wrote in a research note published Thursday. "Even in the unlikely event that today’s disappointment was a mistake, we think it has cost enough credibility that the euro-down story we had envisaged is now less likely to play out."...