In 2020, under the favorable effect of the landing of the 750 billion recovery fund in the euro zone, the superimposed European epidemic was controlled by stages, the exchange rate of the euro against the US dollar appreciated by 8.9%, and the US dollar index with the euro as the first weighted currency depreciated by 6.7%. The weak dollar once became the main theme of the capital market, and the argument that the dollar has entered a long-term depreciation cycle is endless. 202 1 Biden came to power and launched powerful policies, including 1 0.9 trillion US dollars fiscal stimulus plan and 100 days vaccination1100 million doses of COVID-19 vaccine. The United States surpassed Europe in policy strength and epidemic control, which led to the continuous rise of the exchange rate of the euro against the US dollar last year. In the first quarter, the US dollar index rebounded by 3.62% and stood at 93 again, which affected the global asset allocation direction. In this context, we launch this report, looking forward to the trend of 202 1 Euro exchange rate, hoping to look at the global asset allocation pattern from another angle.
1. Since 2020, the euro has greatly appreciated. Summarizing the appreciation process of the euro in 2020, the introduction of the fiscal stimulus plan for European integration, the evolution of the epidemic situation in Europe and the United States, and the relative economic performance of the euro zone have all had an important impact on the trend of the euro at different stages. In the first quarter of last year, the euro zone economy was hit hard by the COVID-19 epidemic. However, under the fiscal stimulus and loose monetary environment of EU countries, the economic prospects of the euro zone will continue to "cloud out" in 2020, and the economic recovery rate is relatively ahead of the major developed economies in the world, which provides impetus and support for the appreciation of the euro.
2. The impact of euro appreciation on European economy. Since the global financial crisis in 2008, the exchange rate of the euro against the US dollar can be described as "bull short bear long", and the appreciation rarely exceeds one year, which may be based on the impact of the appreciation of the euro on its economic inflation. The possible impact of euro appreciation mainly lies in three aspects, one is export, the other is inflation, and the third is US dollar. As far as exports are concerned, European exports are mainly driven by the global manufacturing recovery after the epidemic, and the negative impact of the appreciation of the euro in 2020 on its exports and thus on the economy is not obvious; As far as inflation is concerned, the euro zone has suffered from low inflation for a long time, and the appreciation of the euro will further depress the inflation level, which is obviously not what the European Central Bank likes; As far as the US dollar is concerned, the euro is the most important currency in the US dollar index, and the seesaw relationship between the two is clear, which will also affect the decision-making of the European Central Bank from the perspective of currency game.
Will 3.202 1 euro continue its upward trend? We believe that the appreciation trend of 202 1 Euro will be unsustainable. With the first popularization of vaccines in the United States, the stronger recovery of the American economy and the first shift of the Federal Reserve's monetary policy, the exchange rate of the euro against the US dollar may recover most of its gains in 2020 and return to the range of1.1.13. The reasons include: First, the prospect brought by the unprecedented 750 billion fiscal stimulus is worth looking forward to. However, in terms of the amount, it is still "dwarfed" compared with the United States. Moreover, it is more uncertain than the United States whether the recovery funds used by the EU can directly reach the "pain point" in the process of economic recovery in various countries because of the financial non-integration of various countries and the differentiation of national conditions. Second, 202 1 European economy is hard to find "bright spots". In mid-February, the epidemic situation in Europe rose again, and the vaccination rate was lower than expected, which made the economic recovery in Europe in 20021year slower than that in the United States. Third, at present, the European Central Bank's statement is "full of pigeons", which is in stark contrast to the Fed's attitude of "happy to see the yield of US bonds rise". The European Central Bank does not have many policy tools to directly intervene (depress) the exchange rate, but it can also play an indirect role through a looser monetary policy. Finally, in the short term, the proportion of short positions in the euro has been rising since the second half of 2020, and it is still in a fast rising channel. Because the previous "multi-euro, empty dollar" transactions were too crowded, the potential energy of euro depreciation may increase from the transaction level.