Frankfurt Event

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Outlook for the Euro: The View from the Currency Markets
25th November 2010 - InterContinental Frankfurt

Confidence in the euro is eroding as Europe's sovereign debt crisis throws into question some of the fundamental principles behind the creation of the Eurozone. The European Central Bank's intervention in government bond markets following the near default in Greece has only exacerbated internal tensions as the stronger countries led by Germany intensify pressure on Spain, Portugal and other weaker partners to tighten fiscal policy and reform their labour markets. The potential negative economic, social and political effects of these adjustments do not bode well for the euro - with the ECB's monetary policy options constrained by the mounting risks of a double-dip recession.

Against this backdrop, volatility in foreign exchange markets has surged to levels not seen since the height of the credit crisis. Fears of contagion has hit high-yielding currencies like the Australian dollar, while the US dollar - notwithstanding the US's own debt problems and mixed economic outlook - has surged as the safe haven currency of choice. Carry trade strategies based on shorting the euro and to some extent the US dollar and going long on the Australian dollar and emerging market currencies have been thrown into disarray.

While the EU stability package appears to have calmed market panic and volatility levels in foreign exchange have subsided slightly, any failure to resolve the crisis could trigger renewed instability. In the latest in a global series of strategic forums looking at the key challenges facing the financial industry and capital markets, the Financial Times and Credit Suisse will gather senior economists, currency strategists, asset managers and other market participants to discuss the outlook for the euro and foreign exchange markets generally at this crucial time in European political and economic affairs.

For general inquiries, please contact Annette Berry at +1 212-641-6415 or annette.berry@ft.com.