Central bank policies in the major economies will likely be the main guide for currency exchange rates this year, analysts say.
The Canadian dollar, in contrast, is entering a period of sustained weakness, Frey says. The Bank of
Following years of sustained currency strength,
The economic slowdown in
RECORD LOW INFLATION
German employment remains robust, but the euro may be facing a period of volatility, as a result of diverging economic performance within the eurozone, he notes. The return of eurozone member
The return of funds borrowed under the ECB's long-term repurchase agreement has been the main reason for a drain on excess liquidity, Chandler notes. "At the same time, the only path of adjustment for the uncompetitive periphery members is internal devaluation, which means a relative decline in domestic prices has produced a disinflationary environment on the general level," he adds. "Core countries, especially
As a result, this refusal has served to protect
In the US, the Fed's tapering process will likely be gradual, and may take the better part of 2014 to come to a complete stop, Chandler says. The drag from fiscal policy will likely lessen, he adds. -GP
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