What does consensus expect next year? – Nomura

Analysts at Nomura lists down the important global developments expected by the consensus in the New Year.

Key Quotes

“Political risk behind us: Analysts expect the impact of Brexit and Trump to have run their courses on GBP and MXN. GBP/USD is forecast at 1.25 and MXN is expected to rally over 2017. Meanwhile, in the Euro-area where most new political risks lie, consensus expects EUR/USD to trade up to 1.08 by end17.” 

“EM weakness: A stronger US economy and more Fed hikes mean the market is once again forecasting a bad year for EM (with the exception of MXN, PLN and HUF). Asia FX is expected to weaken against the dollar, led by KRW and CNY. ZAR is expected to depreciate a 9.2% to 15.23. CNY, meanwhile, is expected to moderately outperform the forwards with growth falling by 0.3% over the year.” 

“Scandies expected to outperform, AUD and NZD lower: Consensus expects SEK and NOK to outperform in 2017, meanwhile AUD and NZD are expected to weaken. With the exception of Norway, CPI is expected to pick up in these economies, whilst growth is expected to slow. With economic fundamentals not diverging, the story consensus has here is more likely a reversal of the carry trade we have seen in 2016.”

“Central bank inaction in the G10 space: Outside of the Fed, G10 central banks are expected to remain on the sidelines in 2017. In EM, significant rate cuts are expected in Brazil, Russia and Colombia.”