Peter A Rosenstreich
Swissquote Bank Ltd
Next year will see global deceleration and decline of the USD. To weaken the current strength of the greenback, there will be two critical inputs: the US Federal Reserve Bank will hike rates this week and again in 2019; the European Central Bank will shift bias further towards normalization. Markets are seeing evidence of both, but the Brexit chaos is clouding the picture. Should the UK-EU relationship improve, watch for an overvalued USD to quickly fall.
US inflation was soft in November, because of lower energy prices that fell by 4.1% in a month. Non-energy components showed steady rises as food prices and core CPI both rose by 0.2% monthly. Consumers are still spending, as highlighted by solid retail numbers, but households’ decision to buy used cars and to rent housing rather than buy suggests uncertainty. The broad economy is running white hot, which indicates inflation pressure and three 0.25% hikes in 2019. The Fed is likely to head toward normalization. Wednesday’s press conference offers Fed Chairman Powell a chance to clarify views on market volatility and further rate moves.
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This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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