In this article, we assess the outlook for the US dollar (NYSEARCA:UUP) over the medium term, particularly in light of the currency's relative under performance in 2017. Despite a further 75 basis point (bps) increase in the Federal Reserve's targeted rate band, the US dollar (USD) lost ground against most major currencies, as well as a handful of emerging market currencies.
South African financial assets have recently enjoyed strong gains on the back of the election of the perceived market reformist Cyril Ramaphosa as the new president of the country’s ruling political party, the African National Congress (ANC), in December. The country’s currency, the rand, in particular appreciated strongly in December, gaining more than 10% against the US dollar for calendar 2017. Since making a cyclical bottom in January 2016, the iShares MSCI South Africa ETF (NYSEARCA:EZA) has nearly doubled.
Two key events that have taken place over the past week could fundamentally reshape the appetite for global risk going forward, the first being the renewed risk of a global trade war, and the second, the outcome of the recently held Italian elections.
Blurb-In this article we discuss the relationship between the US Dollar (NYSEARCA:UUP) and crude oil (NYSEARCA:USO), arguably the most important currency and commodity in the global economy today. http://www.seekingalpha.com/article/4121543
We recently put together this article on the digital currency market for Seeking Alpha. Click on the link below to read the full piece. https://seekingalpha.com/article/4099843-growing-digital-currency-market-mean-investors
- South Africa officially entered a recession in Q1 2017 and outlook remains poor.
- Weak domestic demand and stronger Rand have helped contain inflation.
- Improved inflation outlook opens the door for rate cuts in H2 2017.
- This will support South African equities and bonds, although further appreciation in the Rand from current levels does not appear sustainable.
The South African Rand (ZAR) is one of the most liquid emerging market currencies in the world, but is arguably also extremely volatile, particularly in recent years. This volatility is underpinned by the sentiment-driven ebb and flow of international capital flows and tends to make forecasting the currency a notorious challenge. As such, some investors may even suggest that it is impossible or hopeless task to try and forecast the currency
US oil production has recovered notably since bottoming in September 2016 at an average daily production rate of 8.5mn barrels per day (bpd). US oil production (excluding Natural Gas Liquids or NGLs) is now averaging around 9mn bpd, although still below its cyclical peak recorded in early 2015 at around 9.5mn bpd. Nevertheless, the rapid recovery in output in just six months coupled with the sharper rebound in the oil rig count (Baker Hughes data) as illustrated below, suggests that US oil production will continue to climb throughout 2017 and may eventually exceed its former cyclical production peak of 9.5mn bpd.
According to the latest quarterly report on Household Debt and Credit compiled by the New York Federal Reserve, US Household debt increased at a fairly robust pace in the final quarter of 2016, rising by 1.8% q/q or USD 226bn to USD 12.58trn. Despite the sharp increase in 2016, the total amount of household debt outstanding still remains some 0.8% below the prior cyclical peak of USD 12.68trn registered in Q3 2008. As such, growth in overall GDP and nominal disposable income has easily outstripped the growth in overall household indebtedness. When coupled with still very low financing rates, this has ensured that the overall household financial obligations ratio of household debt service payments as % of Disposable Personal Income remains at or near a multi-decade low.