It notes recently improved prospects of a stronger global recovery, with leading indicators for most industrialised countries showing greater household and business confidence. Meanwhile risk appetite in financial markets continues to increase. We also expect a continued improvement in economic conditions to drive a further acceleration in GDP growth. Fiscal headwinds will diminish, while continued strong monetary policy tailwinds will support growth. The US looks set to enjoy a fairly powerful and sustainable growth surge in 2014-2015, with a clear upturn in the housing market a key component. Additionally, US economic growth will support the rest of the world economy. The Euro-zone will enjoy greater opportunities to restore economic, financial and political stability. US growth will also increase global risk appetite. In turn, the corporate sector, with its longstanding strong balance sheet, is likely to boost capital expenditure and new hiring in 2014 and 2015. At the same time, global monetary policy will remain highly stimulatory. In two weeks we publish our latest Currency Strategy, which will examine in detail likely currency behaviour in this more positive global environment. So far this year, G10 currencies have largely performed as their respective central banks would have liked. While we expect the FX market to continue to be influenced by central banks and speculation on likely Fed tapering, cyclically driven currencies including the SEK should eventually benefit from improving global growth prospects.
Read the full report: FX Ringside
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