Brexit, Italy’s budget crisis and Angela Merkel’s plan to retire – some drivers of the dollar price can be predicted for 2019. But then others, undoubtedly, will catch the market by surprise.
Treasury & Risk publishes an overview on how to make sense of currency trends in the 12 months to come. It is written by Wolfgang Koester, a sesoned media commentator who is CEO and co-founder of Fireapps, a currency management solutions provider.
What to expect … kind of
Some expected events have fairly predictable impacts. The Democrats’ recent takeover of the US House of representatives, while the Senate stays Republican, will leave US markets more sensitive to political swings. It also makes it less likely that tax cuts will boost the dollar like in 2018.
The Brexit process, whether on schedule or delayed, will keep weighing on the pound. And conversely, a reverse of the process would reasonably cause a spike. Meanwhile, Italy’s push for additional spending will add uncertainty to the Euro, which could also take a beating from Angela Merkel’s announced step-down from her long-time position as Germany’s Chancellor.
Middle East fragility will keep adding to the difficulties of Iran’s rial, and Saudi Arabia can be affected by the unusual international scrutiny since Saudi journalist Jamal Khashoggi’s death.
This could happen – but then what?
Not all predictable events have predictable outcomes however. A digital dollar could eventually be introduced, but its effect on currency markets is anybody’s guess, argues the writer. A parallel could go for the digitization of financial institutions.
Some all in the blue
Influential murders are filed under ”unknown unknowns” – events which could have genuinely unpredictable effects on currency price relations. Khashoggi’s death in Istanbul, and the Russia-related Salisbury nerve gas attack, are among the recent examples.
A US–China trade war is found under the same heading. But by their definition, unexpected events are hard to list in advance.