Brian Dolan discusses his views on the global economy and the impact on Forex market at the NYC FXStreet Meetup - 10/2/14

1. 2015—The Year of Normalization?
FX Street.com Trader Meet-up
October 2, 2014
New York, NY
Brian Dolan
Chief Market Strategist
DriveWealth.com

2. 2015—The Year of Normalization?
• IMF World Economic Outlook
• Macro Review of Major Economies
• Outlook for Key Central Bank Interest Rates
• Implications for Major Currencies

3. 2015—The Year of Normalization?
IMF World Economic Outlook—July 2014
“An Uneven Global Recovery Continues”
• 2014 global growth forecast cut from 3.7% to 3.4%; 2015 forecast steady at 4.0%
• Downside Risks Remain—global growth could be weaker for longer
• Advanced economies’ growth forecast at 1.8% 2014; 2.4% in 2015
2015: US 3.0%; UK 2.7%; Japan 1.1%; Eurozone 1.5%
• CPI in advanced economies forecast at 1.6% in 2014; 1.7% in 2015
• “Robust demand momentum has not yet emerged” in key advanced economies

4. 2015—The Year of Normalization?
US Key Economic Drivers
• Jobs, Jobs, Jobs
• Wage Growth; hours worked
• Housing prices
• Inflation
• Leading Economic Indicators

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13. 2015—The Year of Normalization?
US Economic Takeaways
• Labor market slack persists; no meaningful improvement expected
• Wages stagnant relative to inflation; personal consumption remains subdued
• Housing prices have peaked; risk of return of housing debt issues
• Inflation remains non-existent
• Fed should remain lower for longer; hike less rather than more

14. 2015—The Year of Normalization?
Eurozone Key Economic Drivers
• GDP
• Unemployment
• ZEW Expectations Survey
• CPI Inflation

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20. 2015—The Year of Normalization?
Eurozone Economic Takeaways
• Recession looming; ECB too little, too late
• Risk of further headwinds from Russia & China
• Disinflation to persist; risk of deflation quite real
• ECB to struggle to pump up economy; will keep trying

21. 2015—The Year of Normalization?
Japan Key Economic Drivers
• GDP
• Consumer Sentiment--Economy Watchers Survey
• Industrial Production
• Unemployment
• CPI

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Japan Economic Takeaways
• Consumption-tax effects to diminish
• Inflation to remain below BOJ target
• BOJ may undertake yet another round of asset purchases
• Vulnerable to risks of a global slowdown

28. 2015—The Year of Normalization?
China Key Economic Drivers
• GDP
• Exports/Imports
• Industrial Production
• Housing Prices
• Milk Prices??

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36. 2015—The Year of Normalization?
China Economic Takeaways
• Growth continues to moderate; risk of <7% GDP
• Likely slow leak out of housing bubble; restrain consumer spending
• Additional government measures to rebalance economy
• Chinese data will continue to weigh on regional/global economies

37. 2015—The Year of Normalization?
Major FX Outlooks
• Overall maintain a short-term trading bias
• USD—overbought near-term; risk of reversal; better overall among G10
• JPY—should remain weakest of G10; also oversold near-term; crosses
• GBP—Stronger on crosses; sideways to mildly higher vs. USD
• EUR—Worst likely priced in; potential rebound, then to 1.18-1.20