FX MACROECONOMICS could not engineer. Despite the
sharp rise in interest rates, equity markets rallied strongly though the composition and leading sectors changed. The dollar rose sharply against
nearly
Other forces were pushing in the same direction. There was mounting evidence that China’s economy was stabilizing with the help of even more debt. Saudi Arabia abandoned its new strategy and returned, it would appear, as
the swing
pr o du c e r , forging a deal with
its rivals,
Iran and Russia. Also, the inventory and manufacturing headwinds on the US economy abated. After three quarters of sub-trend growth (Fed estimates at 1.8%), the US economy accelerated to 3.2% in Q3 ‘16, the fastest pace in two years. It is also the fourth strongest quarterly growth since the beginning of 2010, and Q4 is tracking above trend as well.
12 FX TRADER MAGAZINE January - March 2017
There are three elections slated in the EU next year, and there could be a couple more
Financial Crisis in the best shape.
Policymakers aggressively responded to the crisis and both countries were near full employment. Growth was steady even if not spectacular. The populist-nationalist forces are on the rise in Europe, and they are particularly potent because
the EU and EMU are essentially projects all currencies, including G10 and emerging markets.
At the same time as investors are having to navigate individual events, there is a sense of a larger wave that is washing across the world. It is populism-nationalism, the link between Brexit and the US election. Ironically, these are two economies that have emerged from the Great
that require integration and some surrender of sovereignty in exchange for strategic goals, like greater chances of peace and prosperity.
Europe
There are three elections slated in the EU next year, and there could be a couple more. The Dutch election will be held in March, the
first round
of the French P r e si de n t i a l election in April, and the German general election in September. There is a reasonably good chance that Italy will also have elections, though the parliament session does not officially end until 2018. Snap elections in
Greece are relatively common, and although the current parliament can sit until 2019, Prime Minister Tsipras may be seeking an opportunity to renew his mandate.
Of the scheduled elections, France has drawn the most attention. Te populist-nationalist forces are
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