Strong gains are expected from the euro

The euro is expected to be one of the strongest G7 currencies in the coming quarters, according to Michael Saunders, head of European economics at Citigroup. Citigroup expects the euro to gain 5%-10% against the dollar and sterling and by more than 10% against the yen in the next six months. Saunders said that for two and a half years the European Central Bank has had to set short rates against the backdrop of a generally falling currency. A possible strengthening of the euro would be the result of reduced capital inflows into the US and UK plus a weakness in Japanese growth. The...