The Euro Has Surprised Us, the Yen Has Not

Genevieve Signoret

(Hay una versión en español de este artículo aquí.)

Contrary to what we anticipated last June, instead of weakening against the dollar, the euro has strengthened. One euro now buys US$ 1.11, up from its June 30 closing rate of $1.07.

The Japanese yen, however, has behaved more in line with our prior expectations. We thought it would appreciate against the dollar this quarter. So far it has done so, although less sharply as we were anticipating. Today, one U.S. dollar buys 147 yen, whereas back last June 30 a dollar commanded 161 yen.

The euro is stronger today against the dollar than it was last June. We expected the opposite. The yen is stronger too—in line with our expectations.

One Japanese yen and one euro in U.S. dollars, Index (31 Dec 2019 = 100)

Source: Bloomberg

In sum, our yen-dollar forecast last June was roughly accurate, but our outlook for the euro missed the boat.

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