It’s that time of the year, friends! We’re happy to see a few of our forex ideas from last year play out well in 2014, so why not do it again and throw in some wacky ideas out for 2015 as well?!
Draghi unleashes massive QE?
Despite rate cuts, credit easing, and unlimited loans to banks from the European Central Bank in 2014, there wasn’t a lot of positive traction for the eurozone as manufacturing conditions continues to weaken and inflation dips lower. With the threat of deflation in the cards, it seems that there isn’t much left for ECB President Mario Draghi to do but a massive quantitative easing (QE) program.
We think that IF Mario Draghi brings on QE, it’ll be later rather than sooner because getting nineteen countries with different levels of economic stability (and willingness to foot the bill) to agree on a massive U.S. style QE program will be a big challenge for Draghi. Our best guess is that they’ll hold it off for as long as possible and watch the data for now, but if inflation continues to drop, then Draghi may have no other choice but to act to fulfill the ECB’s mission of price stability.
Year of the Dollar part 2
Like we said in last year’s forex predictions, this one is once again a no-brainer. In 2014, we saw the power of USD strength to not only take down other currencies, but other markets like commodities, all sparked by a strengthening U.S. economy, the end of the Federal Reserve’s bond purchasing program, and speculation of a Fed rate hike in 2015.
The trend of the U.S. economy posting up improving economic numbers (falling unemployment rate, rising GDP numbers) is likely to continue with the surprise drop in energy prices providing a boost to the consumer economy, but with inflation still low it’s also likely that IF we see a rate hike, it’ll be a very, very slow move by the Fed. Unless we see a shock in 2015, the U.S. still looks like the least ugliest house on an ugly block, so the probability is good that the Greenback is likely to have another positive year against most of the major currencies.
EUR/USD to 1.0000?
We think the trend in EUR/USD lower is likely to continue, especially if it breaks and holds below the major support area it’s currently testing (1.2000). The next major support area for the pair could be the 1.1700 area (pre-2008 financial crisis support) but with the right combination of fundamental drivers of a Fed hike and QE from the ECB, a 2000 pip move is not out of the question….shoot, we easily saw that in the last 6 months of 2014! Of course, surprises always seem to pop out of no where, but in this scenario, sellers may likely stay in control for 2015.
Contrarian Play of 2015
Long the Japanese yen. This is a real, real longshot, but IF the Fed raises rates AND the U.S. markets go into risk aversion mode, the Japanese yen COULD possibly benefit from a bit of deleveraging out of risk, which could have a ripple effect in the global markets as well. The pairs to watch would be the comdolls vs. the yen, but with USD/JPY moving almost 4000 pips higher over the last couple of years (and if volatility continues to rise), it wouldn’t be out of this world to say there could be a big snap back in that pair as well. Take this trade and you should automatically consider it a loss, but if it plays out, the reward can be huge!
Enough about the markets! Check out these other wacky pop culture predictions made by the FX-Men, just because it’s fun! Bonus points if you could guess who made them!
1. Taylor Swift takes a different shot at love. After a long, long, long, long, long, long list of short-term flings with very eligible bachelors, Taylor Swift has a high profile romance with the fairer sex. It’s a beautiful, whirlwind love affair that spurs another hit album, record sellout concerts, changes in paradigms and social behavior, and creates non-stop talk among world news. As expected with Miss Swift, it’s a moment that will not last, but it is a step forward for the young songstress as she breaks her previous dating records–it will be the most magical two and a half weeks that the world will never forget!
2. North Korea wins Cyber World War I. The Sony hack sparks a massive cyber war between the U.S. and North Korea, with other countries taking sides and joining the fight. While the U.S. allies consistently keeps North Korea in the dark in spurts, the Hermit Kingdom manages to coordinate one massive final attack with its allies to take out all internet communications in the West. Without Snapchat, Instagram, Facebook, Youtube and Netflix, chaos and anarchy ensues…now that he can’t post any more selfies, Barrack Obama calls Kim Jung Un the very next day to call a truce and hug it out.
3. The 3D printer becomes THE tech gadget of 2015. After a few more innovations, the 3D printer becomes affordable for the average joe to obtain this extraordinary device in 2015, and it is then that we’ll get to live out nerd fantasies of have a Star Trek replicator, printing out unlimited anything that our heart desires (ours would be chocolate chip cookies and Legos). How does it not become the best gadget…EVER?
4. English and European Premier League footballers move in droves to U.S. Major League Soccer. U.S. dollar strength prompts the world’s best footballers to flock to the U.S. to get paid in Greenbacks. Unfortunately, them Yanks still won’t know who Cristiano Ronaldo or Lionel Messi is…and they’ll still call football “soccer.” Sigh.
There ya have it, folks! These are some of our wacky, and completely ridiculous predictions for 2015, but we’re curious to find out your own forex or pop culture predictions (or what would you create if you owned a 3D printer). Leave your thoughts in the comment boxes below and check out our poll!
In last year’s poll, 23.11% of voters correctly picked the U.S. dollar as the strongest major currency in 2014…who do you think the big winner will be for 2015?