Market Outlook 2018: Key Economic Events, Political & Fundamental Overview per Region

What FX traders can expect in 2018? FXCC presents you in an essential report all the key economic events and markets you should keep an eye on as a trader!

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Trying to forecast with any degree of probability, where markets will be at the end of 2018, is an impossible task. Only a trading oracle with mystical powers, could have imagined that; the DJIA would rise by circa 29%, the NASDAQ by approx. 31% and certain FAANG stocks by up to 50% in 2017. How many of our forex analysts could have anticipated that EUR/USD would rise to its highest level in three years by January 2018, despite the ECB keeping interest rates at zero, whilst the Fed raised rates three times to 1.5% in 2017?

By their very nature we also (en masse) never see major catastrophic economic Black Swans on the horizon, for example; it was a small amount of investors and analysts who predicted the imminent sub prime meltdown, even fewer who profited from it. Moreover, investors needed nerves of steel to stay invested during the meltdown, and those that bet against the system couldn’t even be certain of getting their bets paid out, from the same institutions they’d bet against. As the Western Hemisphere banking and financial system imploded, trust and credit evaporated.

Our purpose with this document is not to forecast what will happen in 2018, but to make our clients aware of the various milestones and hazards that may become barriers to our potential success. Forearmed is forewarned and given that the majority of us are skilled (or becoming skilled) at both shorting and being long in our markets, then we should have no fear with regards to major retraces or falls which our; forex pairs, precious metals, or indices might experience.

We should also have (or be developing) the mindset and skills of being able approach our trading and investment decisions from a rational and neutral viewpoint, with a healthy dose of cynicism and skepticism; having your glass 51% full, as a cynical optimist, is often the best approach to adopt when trading markets.

As an exercise in analysis we’ve divided this document into several sections and then sub sections, with the main focus of our analysis centring on the leading major economies: Eurozone, USA, United Kingdom, Japan and China.

Eurozone

Trading and investing always moves on at quite a pace, in 2015 we were still discussing the Eurozone recession and the deep financial and social crisis Greece was mired in. In 2017 these critical issues appeared to disappear off the financial mainstream media’s radar. The words the “Troika are coming”, surely a trigger phrase striking fear through the hearts of many Greek citizens, has vanished from our political and financial lexicon.

The Eurozone and the euro specifically, appeared to be impervious to the many seismic political events which unfolded during 2017; Brexit, France’s election of the political centrist Macron, Catalonia, the German election and its inconclusive result, Italy’s parliament being dissolved by the president. These huge issues failed to dent investors’ collective confidence in the euro and European indices, for more than days at a time. As a forward test, of the area’s overall resilience versus potential outlier events, these examples may prove to be prescient.