Chinese GDP statistics are notoriously unreliable at signalling turning points, so I decided to test the temperature on the ground with a macro tour in Beijing. A couple of days of meetings with policymakers, academics and investors left me comforted and alarmed in equal measure.
Going into 2017, the market consensus was one of a strong US dollar environment, with the expectation of the US engine firing on all cylinders, with support from fiscal policy, monetary policy and de-regulation. The engine has stuttered, the US dollar has been declining all year and not many US dollar bulls are left. We are taking stock.
Some of the clouds over Europe’s political landscape have disappeared after the French presidential election resulted in a market-friendly outcome. So has the Swiss franc now lost its value as a Eurozone malaise hedge, or are there other reasons to hold the currency?
With global monetary policy tightening, what will smaller central banks do now? Most didn't have a choice but to keep rates low to avoid excessive currency appreciation, and some had to resort to quantitative easing (like Sweden) or currency floors (like Switzerland and the Czech Republic). The Swiss floor gave in under pressure in early 2015, so the big question is now whether the Czech Republic might also depart from its currency floor?