Week In FX Europe – What’s Draghi And Company To Do in 2014?

Very little is expected to change on the central banks front for next year aside from the Fed. Central Banks are generally expected to stick with artificially low interest rates while pumping an unprecedented infusion of cash into the financial system.
As they search for new ways to stimulate liquidity to augment the stimulus measures they’ve enacted, central bank policymakers must also fight deflation, and as expected, these are the themes that will continue to dominate the European Central Bank’s (ECB) train of thought as it has at the Bank of Japan (BoJ). Many foreign exchange (forex) participants and analysts are anticipating fiscal policy to be less of an impediment to U.S. growth in 2014. If so, it should allow the Federal Reserve to carefully navigate away from making asset purchases and reduce its massive $85-billion-a-month bond-buying program.

In 2013, the forex asset class managed to loiter within a contrived trading range policed by various central bank policies that, at times, led to a drop in both currency volume and volatility for painfully long stretches. The post-Lehman Brothers storm has now been replaced by a calmer period that continues to lack a badly needed injection of global corporate investment to help spur growth (think Japanese Prime Minister Shinzo Abe’s third arrow problems, high unemployment in the Eurozone, and tentative U.S. growth).

Please read more in Global Currencies Forecast: 2014

WEEK AHEAD

* GBP Consumer Price Index
* EUR German ZEW Survey (Economic Sentiment)
* EUR Euro-Zone Consumer Price Index
* USD Consumer Price Index
* USD Federal Reserve FOMC Meeting Begins
* USD Federal Open Market Committee Rate Decision
* USD Fed’s Bernanke Holds Press Conference
* NZD Gross Domestic Product
* CAD Consumer Price Index

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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