2019 CURRENCY OUTLOOK – IN BRIEF

What happened
  • The U.S. Federal Reserve (Fed) stuck to its plan and raised interest rates four times, lifting the U.S. Dollar (USD) by 3.4%
  • Virtual cryptocurrencies fell dramatically, but so did regular equity markets by end of the year with the Dow Jones weakening 6.4% in 2018, 15.0% lower from its highest point
  • The European Central Bank (ECB) finished its bond intervention, but political pressures and slow economy dragged Euro (EUR) 5.0% lower
  • A problematic Brexit lowered overall business confidence and caused a political crisis that sank Pound (GBP) by 6.0%
  • Emerging and commodity markets suffered as MSCI Emerging Market Growth and Currency Indices fell 22.0% and 4.4% respectively
Tempus’ view
  • Fed policy will remain under heavy scrutiny, which could lead to one or zero interest rate hikes, instead of the two planned for 2019
  • A trade deal between China and the U.S. will come to fruition to avoid global recessionary fears and further market turmoil
  • Elections in May across the European continent will determine whether a new wave of lawmakers can further integrate the EU
  • The USMCA Trade Pact will be ratified, aiding the Canadian Dollar and possibly Mexican Peso if done in the next few months
  • Fate of MXN will depend on success under a new President Andres M. Lopez and progress in building a new airport in Mexico City
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