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Fiat Chrysler CEO Sergio Marchionne rings the closing bell to celebrate the company’s listing on the NYSE on Oct. 13, 2014.EDUARDO MUNOZ/Reuters

Early last week, Sergio Marchionne, the Italian-Canadian CEO of FCA Automobiles, owner of the Fiat and Chrysler brands, said a euro at $1.10 (U.S.) would be "a dream."

He didn't have to wait long for his dream to come true. By the end the week, the euro had broken through $1.10 and kept on going like an out of-control car headed for the ditch. It lost 1.5 per cent on Wednesday, taking the currency used in 19 European countries to $1.05, a fresh 12-year low.

There is no shortage of economists who predict the euro and the dollar will soon hit par, last seen in 2002, when the euro was introduced as a physical currency. Deutsche Bank on Tuesday predicted the euro would hit 85 cents by the end of 2016.

The cheap euro is a godsend to the European auto makers, among them FCA, Peugeot Citroën and Renault, both of France, and Germany's Big Three – Volkswagen, Daimler and BMW. Their share prices have surged as the European Central Bank's quantitative easing measures drive down the euro and lift stock markets, building consumer confidence. The low oil price – it has fallen by almost 50 per cent since the summer – has helped. Cheaper fill-ups tempt buyers to opt for bigger cars, such as crossovers, which consume more fuel but come with higher profit margins for the manufacturers.

"The euro level is helping," Mr. Marchionne said. "These levels are decent."

The strength of the U.S. dollar is partly behind the euro's fall. The U.S. Federal Reserve ended its own quantitative easing program last year and is expected to raise interest rates as soon as June as the American economy gathers momentum and creates jobs.

The euro has fallen even further than the loonie. The loonie is up more than 13 per cent against the euro even if it's at a six-year low against the dollar. Against the pound, the euro is at a seven-year low.

The sinking euro boosts European auto makers in two ways. It propels exports and it produces a currency-translation gain on any repatriated overseas earnings. The combination is lifting sales and profit margins, and investors like what they see. FCA shares rose almost 5 per cent in the last week, taking their six-month gain to 87 per cent. Volkswagen is up 8 per cent in the last week and Peugeot, whose very survival was in question only three years ago, as it piled up billions in losses, is up 10 per cent.

Early signs about QE are encouraging, said European Central Bank president Mario Draghi on Wednesday, only two days after the €1.1-trillion ($14.8-trillion Canadian) program was launched. "Developments are pointing in the right direction," he said at a conference in Frankfurt. "The slowdown in growth has reversed."

The mere anticipation of QE – it had been expected since the autumn and was unveiled by the ECB in January – has sent sovereign bond yields to historic lows, allowing countries such as Italy, which is in a triple dip recession, to borrow 10-year money more cheaply than Canada.

At the conference, Mr. Draghi said "we saw a further fall in the sovereign yields of Portugal and other formerly distressed countries in spite of the renewed Greek crisis. This suggests that the asset purchase program may be shielding euro area countries from contagion."

Under its QE program, the ECB will buy €60-billion a month of public and private bonds through September 2016 and may continue buying beyond that date if inflation does not rise close to its 2-per-cent target. Euro zone inflation has been falling for more than a year and recently turned negative.

Last month, the ECB lifted its growth projection for the 19-country region to 1.5 per cent against its previous estimate of 1 per cent. The launch of QE, combined with weak oil prices and the weak euro, has sent economists scrambling to rewrite their own growth forecasts. In a note published Wednesday, HSBC forecast a 25-per-cent rise in business earnings this year in Europe, excluding Britain, ending a four-year downward trend.

The note by HSBC's strategists said "recent developments in the business cycle strengthen our conviction that 2015 will be the year when earnings finally deliver a positive surprise."