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 The post-Lehman Brothers storm has now been replaced by a calmer period that continues to lack a badly needed injection of global corporate investment to help spur growth (think Japanese Prime Minister Shinzo Abe’s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

• Ireland Leaves Bailout
• BoE Carney Sees Bail-in Rule Agreement in 2014
• Bank of England States Rates Will Remain Low Well Into 2015
• Spanish Protests Scale to the Political Sphere
• SNB Chief: EUR/CHF peg still ‘absolutely necessary’
• ECB To Toughen Sovereign Bond Requirements
• Slovenia Needs $6.62 Billion To Capitalize Ailing Banks
• ECB’s Constancio Says EU Banks Have Collateral
• ECB Member Says CB Could Do More But Not Needed
• Italian PM Doubles Down Calls New Confidence Vote
• UK Bank Lloyds Fined For Sales Bonus Failing
• EU Finance Ministers have Successful Meeting, Despite No Deal
• BOE’s Carney: U.K. Economy Needs Further Policy Support
• BoE Carney Warns US About Delaying Fiscal Policies
• ECB Member Sees No Risk of Rapidly Falling Prices
• Draghi Says ECB Has Won Time Now Governments Must Deliver Reforms
• Italy Approves 8 Percent Bail-in For Bond Holders of Troubled Banks
• Lagarde Warns on Effects of High Youth Unemployment For Recovery
• Greek Doctors Strike To Protest Health Reorganisation
• Inventory Buildup Helps Italian Economy To Stop Contracting
• Portugal Golden Visa Starts To Attract Investors
• Deflation Fears Grow In Europe As ECB Might Not Be Ready
• UK Trade Gap Narrows In October
• BOE’s Carney Sees Positive Signs in U.K. Economy
• French Minister Confident European Banking Union Can Be Reached
• Spanish Prime Minister Believes Economy Has Turned Corner
• Greek Deflation Hints Of Competitive Recovery

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