The Indian markets have taken QE tapering announcements in its stride and will not see much impact as it actually commences.
Actually, we do not expect major changes in the Fed's policy, in the sense that the current tapering of asset purchases will continue through the rest of the year. We definitely do not anticipate any rate hikes this year.
The main cause lies in the process of structural adjustment and the fact that the liquidity that the ECB has been pumping in the economy was only into the banking sector.
I do not think there will be any interest rate hikes until the year after.
In general, I think that the U.S. economy is much more surefooted than Europe at the moment and that should leave the Euro slightly weaker throughout the coming year.
In our view, the current level is definitely unsustainable.
Over the last few weeks Switzerland's macroeconomic data have been surprising on the upside.
How would you describe the overall performance of the Yen against its major counterparts?V.S.: The Japanese Yen appears to be the weakest G-10 currency this year. If we look at the shorter term, for example, the past month, it weakened substantially as well. Obviously, Japan's currency has been a significant underperformer in 2013. V.M.: The Yen has been among the key
In the past couple of weeks we have witnessed Euro's strength across the board.
We believe in some respect the data understated the UK's growth potential at the beginning of the year at the time our European economists were already pinpointing that there were signs of recovery.
Sadly, in the post great recession world not only is too-big-to-fail alive and well, it is likely a far greater problem than it has ever been.
There are some signs that confidence in financial markets is being restored.
I believe that the ECB will try to get interest rates lower and continue to ease the monetary policy further. The question is how much central bankers can get market rates down from here.
To point out, we have a Federal election coming in 2015 and the government is certainly interested in reducing the deficit before they go back and address their voters.
I believe that in one way we can consider falling gold prices to be a positive sign. During the last five years there has been a surge in gold holdings, followed by price increases, as investors were trying to protect themselves from key risks, including a possible breakup of the Eurozone, as well as concerns about US sovereign creditworthiness.
We believe that expected strengthening of the U.S Dollar will most likely also be delayed.
I believe that the Japanese economy is continuing to react positively to Abenomics, as growth is picking up.
The U.K. always has had structurally high inflation issues over the last few years, and the Bank of England is still trying to get to the bottom of this.
Our opinion is that the Eurozone recession indeed is over; however, the upswing is very fragile.
It is a very positive fact that Janet Yellen is to be the next and actually the first chairwoman of the Fed, as she always has been taking part and been highly involved in decision making with regards to the monetary policy setting, and what is more important, always has been in agreement with the current Chairman Ben Bernanke.
I believe it is not so much the underlying economy and its performance that is important; it is rather the housing sector.
We are starting to see an improvement in data from the Eurozone, particularly, in those forward looking components such as consumer confidence series.
We believe the Australian Dollar is ultimately heading lower, as weaker domestic economic fundamentals give way to a better global environment.
I definitely believe that financial market is more stable and banks are safer now.