© David Sloan
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I would be somewhat skeptical in regards of the effect coming from the cell phone sales from this particular point of view. Certainly, the number will be quite significant overall, due to the new iPhone on the shelves. Nevertheless, I believe in case people are about to spend more on cell phones, they might spend less on other products. Therefore, overall, the consumer spending data has not been particularly impressive recently. We are reasonably optimistic on the prospect of the consumer going forward, although they seem to be a little cautious from an aggregate perspective at this moment, even if they probably might spend more on iPhones.
The US sales numbers are rising as companies hire more workers and newly employed Americans spend money. However, exports could take a hit with Europe on the doorstep of another recession, with China and Japan also slowing. How do you evaluate this potential risks and in what way would you expect them to have an impact on the economy?
I believe that the net export figures, which have been a reasonably bright spot in the US economy recently, should become a modest negative in the perspective. At the moment, the good news is that US has become less dependent on energy import due to an increased domestic production, and that is a factor which will continue to play its role. However, given the US economic prospects are looking brighter compared to those from the majority of other countries, and the US Dollar is generally on a stronger path, I think net exports would be negative going into the 2015 for the US economy. I do not think that it would be enough to derail the US recovery, however. To my mind, this will mean that US economy is growing faster than the rest of the world, or at least the rest of the developed world.
What will be the major headwinds for the Greenback and what are your forecasts for EUR/USD, USD/JPY and GBP/USD for the end of 2014?
A lot depends on the Federal Reserve policy and, the main argument against the Fed moving to raise interest rates is the low US inflation. So, I would say that low US inflation is the main headwind for the US currency. Talking about the forecasts, we expect the EUR/USD to reach 1.22 by the end of Q4 of this year. As for the USD/JPY currency pair, our main target is at 116 levels, and finally, we anticipate 1.579 for the GBP/USD by the end of this year.