Euro Likely to Test Dollar Parity Level According to CME Roundtable Participants

The euro is likely to touch or break the parity level with the U.S. dollar before it rebounds later this year, a panel of economic analysts predicted on Thursday June 3, during a media roundtable on the euro sponsored by the Chicago Mercantile Exchange (CME). The euro - the new currency of 11 nations participating in European Economic and Monetary Union (EMU) - has lost approximately 13 percent of its value against the U.S. dollar since its debut at the start of the year mainly because of sluggish economic growth in the 11 member nations versus the United States. Its best hopes for a rebound hinge on a slowdown in U.S. growth or rising U.S. interest rates, the panelists agreed. The participants in the media roundtable teleconference were: Marc Chandler, chief currency strategist for Mellon Bank; Yra Harris, independent currency trader at the CME; Craig Larimer, managing director of Banc One's international market analysis unit; and Jordan Rosner; chief economist at Optima Investment Research. "Even today with an apparent peace accord in Kosovo, we are testing new lows in the euro around the $1.03 (U.S.) level," Harris said. Chandler said it was "unlikely" that the euro would replace or strongly compete with the U.S. dollar as a major international reserve currency, and that the United Kingdom would likely continue to wait on the sidelines before joining the EMU. Rosner noted that there remain "many bearish indicators" for the euro and that support for the euro may emerge at the two Deutsche mark level (or roughly $0.9740 U.S.) once the one U.S. dollar level is reached.