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6 Jan 2014
Flash: The essential 2014 watchlist - Investec
FXstreet.com (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec comments that as business returns to normal in 2014, he has outlines a few things to watch out for that may provide insight to future trends and direction.
Key Quotes
“Firstly, US 10 year Yields – if we see a sustained break of 3% we expect to see USD buying and may prompt some verbal intervention by the Fed after some fairly hawkish tapering talk from Fed speakers late Friday and on the weekend. Rising yields have already filtered through to 30 year US mortgage rates in the last few weeks and Fed officials will want to quickly nip that in the bud."
"Secondly, global equities, a fall whether on taper expectations in the US equity market, or risk off on weak data releases, will be another likely catalyst for potential USD buying.”
“Thirdly, employment, wage growth, and inflation numbers, we feel this could be the year for deflationary pressures if Central Banks take their foot off the gas too soon. The job market will hold the key to potential wage growth... this is important to a sustained recovery and 'good' inflation.”
“Without stronger employment it will be difficult to generate the wage increases needed, as too much labour slack will lead to those negotiating wage rises to feel the pressure from the unemployed wanting to step in at a cheaper level. With the new year upon us there is plenty to consider as to what will drive FX rates this year.”
Key Quotes
“Firstly, US 10 year Yields – if we see a sustained break of 3% we expect to see USD buying and may prompt some verbal intervention by the Fed after some fairly hawkish tapering talk from Fed speakers late Friday and on the weekend. Rising yields have already filtered through to 30 year US mortgage rates in the last few weeks and Fed officials will want to quickly nip that in the bud."
"Secondly, global equities, a fall whether on taper expectations in the US equity market, or risk off on weak data releases, will be another likely catalyst for potential USD buying.”
“Thirdly, employment, wage growth, and inflation numbers, we feel this could be the year for deflationary pressures if Central Banks take their foot off the gas too soon. The job market will hold the key to potential wage growth... this is important to a sustained recovery and 'good' inflation.”
“Without stronger employment it will be difficult to generate the wage increases needed, as too much labour slack will lead to those negotiating wage rises to feel the pressure from the unemployed wanting to step in at a cheaper level. With the new year upon us there is plenty to consider as to what will drive FX rates this year.”