Let’s start the year with quick and wacky predictions for the months ahead! The FX-Men made pretty decent calls for 2015. What forex trends and other shenanigans are they looking for in 2016?
More oil price declines will lead to $1 per gallon of gas
The Black Crack is in more slippery slopes. Recall that oil prices began sputtering at around $115 per barrel in mid-2014 when production from U.S. shale producers, Organization of the Petroleum Exporting Countries (OPEC), and Russia outpaced global demand. The downtrend found traction near the end of that year when OPEC has decided against cutting its production in favor of knocking out its competitors.
A couple of multi-year lows and countless sleepless nights for oil producers later and there’s still no real bottom in sight for oil. In fact, the game of my-production-is-bigger-than-your-production is still very much on. The U.S. has repealed a 40-year ban and is now allowing oil exports outside Canada; Iran is ready and willing to flood the markets with more supply once its sanctions are lifted, and OPEC is still not budging its production targets. With the major producers still running on full steam, how low can oil prices go in 2016?
EUR/GBP to maintain its 500-pip range?
It’s difficult to predict a trend when both the euro and the pound are facing tough challenges ahead. On the euro zone side, Draghi and his gang are just getting warmed up on their stimulus efforts. So far the ECB is not shying away from cutting rates left and right; expanding and extending the scope of its QE program, and jawboning the markets regularly. Then there’s the region’s ongoing debt saga, which is threatening not only Greece’s membership, but also Angela Merkel’s authority in Germany.
The U.K. is not without its headaches. The pound had tipped over into hot water in the later part of the year when the Bank of England (BOE) surprised the markets with an interest rate vote that hinted that members are taking a chill pill when it comes to hiking its rates. Add inflation concerns and uncertainty over the upcoming (and increasingly more possible) Brexit vote and you’ve got a potent mix for the pound bears this year. This year the euro and pound bulls and bears will likely keep EUR/GBP between .7000 and .7500.
Comdolls will make a comeback in 2016
A pretty contrarian shot but one we’re not shying against. While concerns over China’s growth and global easy monetary policies could weigh on risk-taking, we believe that the latter would soon spark economic activity and eventually encourage a bottom on risk sentiment.
It also doesn’t hurt that we’ll be welcoming hoards of Chinese babies this year as China ditches its one-child policy. We’re looking at new child care facilities and new homes that need constructing as well as a surge in spending for milk and other baby-related products!
That’s it for the markets…for now. Let’s take a look the FX-Men’s wacky predictions that made the cut this year. Which do you think is the most possible?
1. Rise in the popularity of wearable technology. Because the iWatch just didn’t do it, Apple execs will try to force Steve Jobs back from the grave by creating the iWear clothing line. It includes muscle shirts that monitor your heart rate and produces selfies each time you face a mirror, shoes that have GPS, and pants that tell you when you need to hit the gym.
2. Donald Trump will win the U.S. Presidency. He will create a new reality show, “The POTUS” where he hires and fires cabinet members, orders military strikes, and wrestles Putin in a no-holds barred cage match.
3. Leo will finally win an Oscar. Either that or someone will portray him in a biopic reflecting his struggles in getting an Oscar. Then that guy will get an Oscar. In any case, we’ll just put this up every year until it becomes true.
4. Another celebrity couple will split. Please don’t let it be KimYe.
5. The 2016 Olympics will be a huge success and boost to Brazil’s economy. Unfortunately, some Olympians will party so hard they won’t want to leave (or go missing because “Rio has them now”), setting back the Olympic games for the next 10 years.
There you have it, forex geeks! What other market or wacky predictions have we missed? Care to share your own predictions?
We’d also like to know what you think about the major currencies in 2016. Which one has the best chance against the Greenback in 2016?