23 January 2018
The US Senate last night approved legislation averting the US government shutdown that lasted 3 days. The US dollar was again a victim of the uncertainty and interestingly has failed to materialise any substantial gains since the announcement. Sterling reached a new post-Brexit high of 1.4004 against the dollar overnight as optimism increases over Brexit negotiations.
There was further economic optimism generated by the PWC survey. The survey stated 36% of business leaders expected the global economy to strengthen in 2018, up from 17% in 2017. The IMF also raised global growth forecasts, although it cut its forecast for UK growth in 2019 to 1.5%, down from 1.6% previously.
The January edition of Germany’s ZEW survey of investor confidence headlines an otherwise tame data docket in European hours. Sentiment is expected to improve but the outcome is unlikely to generate much volatility in the euro.
The annual World Economic Forum will continue in Davos. The gathering of global leaders in politics, economics, business and finance will almost certainly produce ample eye-catching headlines. Clearly, the start of 2018 has seen unprecedented optimism in global markets which has translated into broad dollar weakness. It will be interesting to see if the global leaders share this optimism.
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