Where to invest in 2018

Where to invest your money in 2018: foreign exchange market

It looks set to be a challenging year for the US dollar against the Euro. Photo illustration by Bruno Vincent/Getty Images
By Georges Batrouni
Tue 23 Jan 2018 11:33 AM

It looks set to be a challenging year for the US dollar against the Euro, according to Georges Batrouni, head of Middle East at ActivTrades. Here's his take on 2018:

Euro

We’re quite bullish on the Euro. As all currencies are paired against the dollar, this trade is looking positive throughout 2018.

The Eurozone seems to have put the issues of Brexit to one side for the moment and there is real strength in the major economies of Germany and France.

In addition, it seems that there is now a greater unity in the EU and even some consensus on greater centralisation, especially with Macron and Merkel in the ascendant having seen off the far-right, anti-EU challengers in recent elections.

Sterling

It’s going to be a challenging year for sterling. Obviously Brexit is dominating the political scene and there are increasing doubts over the prime-ministership of Theresa May, which means we can’t rule out another general election.

Such instability is never good for a currency, so we expect downward pressure for much of the year, especially as interest rates won’t move more than once or twice over the year as the impact of Brexit continues to act as a drag on the economy.

US dollar

There was a lot of downward pressure on the US dollar in 2017 and this will continue in 2018. There are a number of factors here, including the tax cuts, the increased borrowing to pay for them and the general uncertainties around Trump’s presidency.

Inflation is also starting to rise, with the Federal Reserve expected to move on interest rates again, so that has to be factored in, but there’s also a feeling that Trump and his team are quite happy with a weak dollar as it helps exporters – and balance of trade has been a key part of Trump’s message from the campaign onwards.

Canadian dollar

If there was one currency that we’re quietly confident about it’s the Canadian dollar.

Usually, you assume that it moves in line with the US dollar, but the economy north of the border has been strong with unemployment continuing to fall and oil prices also on the rise – and any economy in which oil is prevalent will enjoy a good year.

There is an anticipated interest rate rise in Q1, which also adds confidence. When you look at the comparisons to the US, we see it continuing a bull run for 2018.


Georges Batrouni, head of Middle East at ActivTrades.

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Last Updated: Tue 23 Jan 2018 11:03 AM GST

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