Greece is the way we are feeling
By Vincent-Frédéric Mivelaz
The worldwide economic boom seems to be reaching Hellas. After being on life-support loans since 2010 and being bailed out for EUR 40.2 billion in 2015, Greece has implemented more than 110 reforms imposed by the European Commission, and its economy is giving clear signs of recovery. Q3 2017 real GDP increased 1.30% annually, and December 2017’s Consumer Price Index climbed 1.0% annually. Unemployment is down 5.1% since the start of 2015 (but still at 20.70%), the country’s debt rating has risen and the Athens Stock Exchange has surged 6.54% since the beginning of the year. Greece has still a long way to go, but it is on track to restore financial independence by the end of the year.
Wait for a dollar rally
By Arnaud Masset
The greenback is extending losses against not just the Japanese yen but also against all G10 currencies, because investors see the negatives of President Trump’s protectionist trade policy. What they do not see is the improving yield differential between the USD and its peers.
Indeed, the incentive for traders to hold the USD has improved consistently since the beginning of Q4 2017. This is especially true for the yen, whose 2-year differential has slipped continuously, reaching -2.19% this morning, compared to -1.50% in mid-September. Since the start of October, the US economy has sent strong positive signals. All economic sectors have exceeded median forecasts, with housing and real estate market leading the charge. Once investors see the dust settle on trade policy, we might see more buying of the USD.