Goldman Sachs is reiterating its call for euro-dollar parity by year-end, unfazed by the fact that it stands practically alone in seeing such steep appreciation by the greenback.

The US currency will need to surge more than 7 per cent from $1.0769 per euro as of 7 a.m. in London to reach parity, a move that isn’t predicted in any of more than 60 bank forecasts tracked by Bloomberg.

Even after retreating 0.2 per cent on Monday amid gains by higher-yielding assets, the greenback has climbed 2.3 per cent since Oct. 30 and more than 12 per cent this year. The dollar surged on Friday after the strongest payrolls report this year boosted the odds that the Federal Reserve will lift its benchmark rate in December to 68 per cent, up from 35 per cent on Oct. 27, the day before the central bank concluded its last policy meeting. There's plenty of scope for the US currency to benefit as the Fed "normalises" policy and the European Central Bank adds stimulus to spur inflation, Goldman analysts, led by New York-based chief currency strategist Robin Brooks, wrote in a report dated Nov. 8.

The “employment data have made December lift-off all but certain,” though markets “are hesitant to embrace dollar longs again,” they wrote. The dollar will reach $1.05 per euro by the ECB’s December meeting and “parity by year-end.”

The median estimate is for the greenback to trade at $1.09 per euro by Dec. 31, while the most bullish of forecasts compiled by Bloomberg is for an advance to $1.05. The euro sank to a 12-year low of $1.0458 in March and was last at dollar parity in December 2002.

Bloomberg