Currency Report

European corporates can finally begin their boosting recovery because of the strong dollar this year. Since the beginning of 2015, Euro started to fall against U.S. dollar in a rapid trend, from $1.2099/€ on January 1st to $1.1615 on January 22nd. Then after 22nd, euro dropped even more sharply from 1.1615 to $1.1125 in Jan 26th, which dropped 4.22% in only 4 days and 8.05% in nearly one month.

After this tremendous decline, euro rebounded slightly and tended to flatten until February 26th. However, the euro restarted its sharply decline against the dollar from Feb 26th to Mar 16th and hit the historical lowest level of $1.048. Euro dropped 7.76% in these twenty days and its total decline from the beginning of this year reached 13.36%. Since then, euro barely went beyond $1.1000 and fluctuated between the range of $1.0500 and $1.1000.

The euro fell drastically against the dollar in January following the European Central Bank's announcement that it would pump a trillion euros into the euro zone economy to revive sagging growth and ward off deflation. The euro is set for yet another trial as global markets await snap Greek elections on Jan 25th. A win for the leftist party could trigger a standoff with Greece's EU/IMF lenders. Uncertainty was considered added to the euro's weakness. The dollar appeared to be headed higher given the Federal Reserve's path toward tighter monetary policy in contrast with the looser policies of other central banks such as the ECB.

In February, the dollar’s soaring to a high point against the euro was based on expectations of higher U.S. interest rates to a great extent. The dollar’s rise against the euro accelerated after inflation and durable-goods orders in the U.S. were firmer than expected. During this period, not only euro faced a situation of depreciation, Japanese yen, Chinese Yuan and other major currencies were all falling against the strong dollar.

European Central Bank’s program aiming at lifting the euro-zone’s...