EUR stands to hit USD parity with the USD

The EUR is teetering towards parity with the USD, Bloomberg reports citing numerous analysts who warn that the currency could drop further following US president-elect Donald Trump’s inauguration this month. “We’re not far off so it could happen very quickly,” senior strategist at BNY Geoffrey Yu said, adding that “parity is inevitable.”

Where we’re at: The EUR tumbled over 7% since September 2024, recently touching a more-than-two-year low at USD 1.0226. “Sentiment could not be worse,” head of G-10 FX spot trading at Nomura Antony Foster said. The EUR has hit USD parity a small handful of times in its 25 years of existence, Bloomberg notes, most recently in 2022 after Russia launched its invasion of Ukraine.

Options markets suggest a 40% chance that the EUR will hit parity with the greenback in 1Q 2025, with contracts targeting parity gaining over the last week. JPMorgan also expects that parity could be realized this quarter, with Wells Fargo expecting the threshold to occur during the second quarter. Other analysts expect it to happen as soon as this month.

What’s behind the approaching parity: Analysts including Bank of New York Mellon and Mizhuo point to mounting pressures on Europe which could find itself caught in the middle of a trade war following Trump’s move to the White House. Weak economic growth, aggressive ECB rate cuts compared to a slower approach by the Fed, and political instability also contribute to a bearish outlook on the EUR, Bloomberg explained.

The EUR’s falling value is also related to the strength of the USD, which has been risingover the past several weeks since Trump’s reelection. The USD’s rise is likely triggered in large part by Trump’s plans to impose broad tariffs on imports from several countries (including Canada, Mexico, and China), although the question of whether the currency rally will continue depends on whether Trump follows through on his campaign pledges.

MARKETS THIS MORNING-

Asian markets are broadly in the red in early trading this morning, with the exception of South Korea’s Kospi, which is firmly in the green. Hong Kong’s Hang Seng Index is down more than 0.6%, mainland China’s CSI is down 0.8%, and Shanghai is also down 0.4%. The Kospi is bucking the trend so far and is up 1.3%.

Futures suggest a more positive open for Wall Street later today, with futures for the Dow Jones, S&P 500, and Nasdaq all in the green despite all three indexes falling at the end of trading yesterday.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.1% yesterday on turnover of SAR 7.7 bn. The index is up 0.6% YTD.

In the green: Almoosa (+15%), Almawarid (+10%) and Saudi Re (+9.2%).

In the red: Albaha (-4.4%), Cenomi Retail (-3.2%) and Chemanol (-2.6%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.2% yesterday on turnover of SAR 44 mn. The index is down 2.1% YTD.

In the green: Sure (+8.3%), Alhasoob (+6.6%) and Pan Gulf (+5.1%).

In the red: SPC (-9.7%), Amwaj International (-8.0%) and AlBabtain Food (-7.4%)

CORPORATE ACTIONS

Riyadh Development has lined up Capital Market Authority approval to hike its capital up to SAR 2.3 bn from SAR 1.8 bn, by way of issuing new shares, according to a statement by the authority. The move will allow the firm to acquire two real estate assets from Remat Riyadh Development.

Glass and ceramics maker Raoum Trading issued its main market transfer document(pdf) after acquiring finalapproval from the Saudi Exchange. Trading of Raoum's shares on Nomu continued until the transfer document’s release, following which trading has been temporarily suspended for up to five sessions to finalize the move. Raoum submitted its transfer request back in June 2024.