FX Concept's John Taylor Says Euro Going To $1.20 On Bloomberg TV

John Taylor, Chairman of currency hedge fund FX Concepts, appeared on Bloomberg Television this morning and said that he believes the Euro will drop to $1.20 by August. Here are some of the highlights of the conversation.

On the Euro:

"There is nothing really good happening with the euro at all. The economy is weak and you have the southern European countries falling apart."

On the Euro dropping to $1.20 by the end of the year:

"I would say quicker than that, probably by August. It's going to be quick because things are really falling apart and there will be, there's got to be, a solution of some sort between now and August. Let's face it, we were $1.50 at the beginning of this year, or in December, and now we're at $1.33."

On what would need to be done to reverse the course of the euro:

"Well some of these guys have to be thrown out. Now I say some of these guys because I don’t want to say, you know, Greece, Portugal; you don't know which ones will do it. If you look at a country like Latvia, which is effectively in the euro, it's been saved by the European commission and the IMF, much like they are suggesting Greece will be. Their retail sales were down 30% last year, the GDP was down 18%, it's expected to drop another 8% this year, Latvians are starving and the place is a disaster area. And that is what you have to go through to be part of the euro."

On the Yuan and the Chinese/U.S. relations:

"Something has got to give. The Chinese have made all kinds of reasons why they are not doing it [not allowing the yuan to float freely]– politically not the right time, we don’t have a good banking system, nobody else is complaining… [Liu: Eventually you think they will?] They must. They absolutely must."

On where the dollar, over next 3 months, will be the strongest against which currency:

"It will be strongest against the euro and maybe the Eastern European countries that are sort of surrounding the euro and are dependent on the health of the European community."

On his trading recommendation for Asia down the road:

"Further horizon is to long Asia and short the Euro. [Erlichman: Can you give us more color on that really quickly?] It is clear that Asia has come out of this recession in 2008-9 screamingly fast, and very strong, and Europe isn't coming out of it at all and the United States is in the middle. So sell Europe, buy Asia."

On the Australian Dollar:

"The Aussie Dollar is too small. I mean everybody owns the Aussie Dollar but you have to look at Aussie. The average house in Australia cost 7.8 times the average wage. In the United States, that number was like 5. And we cratered because our house prices were too high. So you have to keep a little, an eye on... Australia is doing fantastically because they are shipping everything to Asia. They are giving up the whole continent and sending it all to Asia."

You can find the full video here.