2017 look ahead: global currencies

Currency fluctuations have been a big theme in 2016 and will no doubt drive the markets in 2017, as countries compete aggressively with trade in these low growth times. Kit Juckes, macro strategist at ‎Societe Generale, explains the methods and reasoning behind each currency move.

The currency fluctuations in 2016 were driven by political uncertainty and euphoria, threats of protectionism and various government manipulations. We've witnessed the US dollar surge to levels not seen since 2002, sterling plunge to a 30-year low, the yen see losses thanks to the impressive gains of the dollar and the Chiese yuan braced for its biggest annual loss since 1994.
 
Kit Juckes, macro strategist at Societe Generale, discusses these four currency themes in detail and explains how the foundations formed in 2016 will likely continue into 2017. Brexit had the biggest impact on sterling, sending it to levels last seen in the mid-1980s which made it the worst performing currency for a developed economy in 2016. However, this currency depreciation was a huge boost for the FTSE 100 and helped the market to all-time highs.
 
The dollar has been on a run ever since Donald Trump won the US election with his promises to spend big. And this dollar strength, as the world's reserve currency, has had a knock-on effect on other global currencies especially the Japanese yen. This has benefited from some depreciation in 2016, taking the pressure off of its exporters at long last.

Meanwhile China's yuan continues to plummet but will this downward spiral continue? Kit explains the consequences of such a weakening scenario and how the interconnected currency relationships are a new chapter for modern day economics. ​

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