Societe General's global strategist, Kit Juckes, makes the first reasonable case why the euro might go to parity
People have been calling EURUSD to parity for a couple of years now and they've not even come close. Most opined that the Fed tightening, the ECB easing, and Europe imploding would be the causes but the target remains more than out of arms reach.
In his latest note he says that the UK voting to leave will be negative enough to knock EURUSD down to parity this year, and cable under 1.30.
While he sees the ECB giving it a helping hand lower on Thursday, he makes a great point in that the current bouts of risk aversion also include worries about Europe's immigration problems and Brexit fears. This, he says, is hindering the usual safe haven flows into EUR.
I don't think the market is really ready to grasp the full effects of a UK exit on the euro yet, and the main focus has been on the pound. Parity calls have come from far and wide and I'd love it if, after all prior reasons given, it was the little old UK who finally sent it there.
