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Long Term Forecasts
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Chinese Dragon To Unshackle Renminbi?
With the Year of the Dragon around the corner, will the renminbi be unshackled? Will there be a surge in domestic consumption, or will a housing bust weigh on the economy, dragging down global economic growth? To understand how dynamics may play out in China, try to put yourself into
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FX Forecast Update January 2012: Euro Pain - Stocky Gain
EUR/USD: Eurozone money market rates are expected to fall further and as a result we have opted to lower our 3M EUR/USD forecast to 1.26 from 1.28. We still look for improved global macro data to weaken the dollar during 2012, but elevated eurozone debt risks and the outlook for
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U.S. Dollar & Currencies: Review and Outlook
In 2012, policy makers around the world may be driven by the realization that the theme of 2011 was not a Euro-specific crisis, but simply another stage in a global financial crisis. Central bankers may ramp up their printing presses in an effort to limit "contagion" concerns. As such, the
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2012 Outlook: Uncertainty about Growth and Debts
Following a fairly quiet beginning of the year, the second half of 2011 saw wide fluctuations and jittery markets. The predominant theme was the European debt crisis, which despite several 'ultimate' solutions has still not been solved. Hence, the politicians have still not managed to convince the financial
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1Q 2012 Markets Outlook: The Year of Living Dangerously Begins
As we enter 2012, we expect investor risk sentiment to remain the principal driver of key markets' direction. Global growth in Q1 2012 is likely to remain fragile and uneven. The Eurozone debt crisis is about to enter its third year and the crisis seems to be snowballing. Going into
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Europe in 2012: Renaissance or More Dark Ages?
According to the popular narrative, the European sovereign debt crisis was caused by runaway government spending in peripheral European countries. However, this narrative is somewhat of an oversimplification. Although Greece, Portugal and Italy all entered the current crisis with budget deficits and elevated debt-to-GDP ratios, Spain and Ireland had exemplary
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Euro area: A Rising Tide Lifts All Boats
The euro area economy faces significant headwinds and is most likely in recession currently. We expect the economy to shrink in both Q4 2011 and Q1 2012.
However, we do expect the recession to be fairly short as headwinds ease and some of them even turn into tailwinds. In particular stronger
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Outrageous Predictions: 2012 - The Perfect Storm
Generating this year's Outrageous Predictions has been even more of a pleasure than usual, as it seems that never before have there been so many path uncertainties for the future, so we have had an infinite variety of scenarios to draw on. As usual, we try to keep at least
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Medium-term USDJPY Projections
Our currency markets continue to be racked by volatility, driven by uncertainty in Europe and tepid attempts at a rebounding economic recovery on a global scale. For countries like Japan that have had both weak fundamentals and a major natural disaster on its plate, a strong national currency is no
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Themes and Trades for 2012
In our outlook for 2011 we highlighted that the level of uncertainty going forward was unusually high. If anything, in retrospect, this proved to be something of an understatement. Our stance was broadly a positive one for fixed income, a better USD story and for equities to look somewhat at
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FX Top Trades 2012: How to Position for the Coming Year
For the third time we present our FX Top Trades for the coming year. In 2010 and 2011 our top trades delivered an average return of 3.7% and 3.5%, respectively, with a hit ratio of 80 Like the last two years the trade ideas are based on a number
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Thunder Down Under: Australia Braces for a Storm
Despite the challenges of the past few years, economic growth in Australia has been remarkably immune to the economic weakness that has characterized the recoveries across the rest of the developed world. In fact, Australia can claim the title of the strongest developed economy in the world over the past
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2012 Economic Outlook: The Game Has Changed: Transitioning to a Post-Leveraged World
Despite many challenges, we believe U.S. and global economic growth is poised to continue over the course of next year. However, businesses will need to remain cognizant of the evolving economic and policy landscape that will prove to be a game changer in 2012.
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Guide to Save the Euro
Can the euro be saved? Is it possible to stem the flight of money from the periphery into the core? With a botched German auction in mind, investors are now wondering whether it's possible to prevent a flight out of “all things euro”? We examine the dual challenges of fiscal
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Dollars & Sense: Politics Continue to Drive Volatility
Unfortunately for investors, Europe remains the bad news that won't go away. Since our last issue of Dollars Sense where we outlined the euro zone's latest “plan” to help address the sovereign debt crisis, contagion has only worsened, with Italian yields breaching the critical 7% level last week (see
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International Financial Outlook November 2011
Key proposals following the eagerly awaited EU summit helped to push €/$ briefly through 1.42, from 1.32 at the start of October, but the rally was short-lived. Political tensions reached fever-pitch as Greek PM Papandreou unexpectedly called for a referendum on the bailout package. After heightened concerns and renewed volatility,
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G10 FX Roadmap
USD slightly better supported as scope for higher yields elsewhere has diminished. EUR downside risks now look less substantial as political tensions have eased in periphery, but upside risks also diminishing as economic weakness sets in
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Forecast Update: Euro Area in Recession, US and China Recover
The global economy is increasingly decoupling. It seems more and more evident that the euro area cannot escape recession, as leading indicators point to a fall in GDP in Q4 followed by a small decline in Q1. This is in sharp contrast to the US and China where growth is
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Q4 Market Comment: Maximum Intervention And Crisis 2.0
Since our last quarterly outlook called 'Maximum Uncertainty' the world has moved from bad to worse. Growth prospects have soured and governments and central banks are everywhere pulling out the stops to save the system once again. In Europe, renewed efforts to save the European Union from its debt crisis
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Q4 Macro Outlook: Emerging Economies Drag Developed Along
Though the world economy will see robust growth of 3.8 percent this year this figure papers over a chasm between developed and emerging countries. While the developed economies led by the heavyweights (U.S. and Eurozone) are struggling to cope with the drag from deleveraging, emerging markets have hiked rates as
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Long Term Forecasts 
