Happy new year, forex folks! Start your 2012 with a bang by taking a look at my quick and wacky predictions for the year. Which ones do you think are likely to come true?
Central banks to loosen up a little more?
As several economic problems linger and with the threat of another recession looming, major central banks are likely to stick to their loose monetary policies in order to prop up their respective economies. Some might even decide to implement additional easing measures if economic slowdown worsens.
One particular central bank that could keep loosening its monetary policy is the ECB, as its current head Mario Draghi seems to have a penchant for rate cuts. With the euro zone's fiscal stability still on the line, the ECB could be forced to slash rates at least a couple more times in 2012 to prevent a liquidity crisis.
The BOE is also likely to inject another round of easing next year as their policymakers already expressed their willingness to expand their asset purchases by February. The RBA might also go for a rate cut or two during the first half of the year in order to stoke inflation in Australia.
Last but certainly not least is the Fed, which is already expected pledged to keep interest rates at their current levels until 2013. Yep, that means at least 12 more months of record low rates for Uncle Sam! If that's not enough to do the trick, Big Ben and his men might just give in to QE3. Who knows, we might even see another set of coordinated central bank easing!
Euro zone debt crisis: More headaches for world leaders
The euro zone's debt drama has taken center stage for a few years now, and I don't think that next year will be any exception. Now that the ECB has softened its stance on being the lender of last resort, it won't be long before the central bank makes room for more bond purchases.
It probably won't be effective though. France is already on the verge of being slapped by a downgrade by multiple credit rating agencies. Also, Greece is already way over its head in debts, and word on the street is that a default is inevitable.
Italy could then follow the debt spiral as it asks for its first bailout package only a few months after its 10-year government bond yields surged past the significant 7% mark. Let's hope that there will be enough G7, G20, EU, or even emergency conference calls to keep the euro zone economy from collapsing!
SNB will raise the roof...or just the EUR/CHF floor
If euro weakness prevails as their debt situation worsens, SNB might be forced to adjust their peg higher. Market players see the EUR/CHF floor rising to at least 1.2500 from 1.2000 in the first quarter, but let's not count our eggs just yet! The SNB could still remove the peg if Swiss economy finds a way to deal with threats of a strong franc.
Okay, enough with the gloom and doom. It's bad enough that the Mayans predicted that the world will end next year! Take a look at these wacky predictions that the FX-men came up with. Enjoy!
- Apple will release another new iPhone and a brand-new gadget called the iTable, which is just like a giant iPad. Both devices will enable its users to download food so that you can smell what CEO Tim Cook is cookin'! Of course these goodies can also be shared via iCloud and you can tell Siri to customize the dishes according to your tastes.
- China will dominate during the London Olympics as their contingency will try to win all the medals. After all, they are already excelling in the economic arena and they have to be the best in every single way imaginable. Otherwise, High Expectations Asian Father will be extremely disappointed.
- Celebrity couples will keep making headlines next year. Justin Bieber and Selena Gomez will break up because that's just the way the cookie crumbles in Tinsel Town. Brangelina will adopt another kid and, since I sent a new application this year, I'm really hoping they'll be adopting me this time. Of course, Kim Kardashian will get engaged, married, then divorced all over again.
- Facebook will IPO as a blue chip company and Mark Zuckerberg will get married.After getting an IPO early this year, Mark Zuckerberg and his bots will work on churning out one cool Facebook feature after another to ensure the company's blue chip status. Zuckerberg will then get married to appease his new board of directors and complete his CEO lifestyle.
- Another overnight sensation will rise and put Rebecca Black's and Justin Bieber's popularity to shame. Not even threats of internet censorship will be enough to keep fame-seeking youngsters from producing one-hit wonders! Unfortunately, this just might be bad enough to usher in the end of the world as Mayans predicted. Then again, it could be tolerable enough to make us party like it's 2012. Oh wait, it already is 2012!
There you have it, forex geeks! Take a mental picture of this list, because you just might see them happen in the next few months!
Have a happy new year, everyone!
- Quick and Wacky Predictions for 2013 05:41 01 January 2013
- 2012: The Year of the Euro? 05:26 03 January 2012
- Fed and ECB Monetary Policy Outlook for Q4 2012 05:35 12 October 2012
- Who the Heck is Mario Draghi? 06:26 12 September 2011
- Monetary Easing: Who's Next? 06:24 16 October 2011