Inflation is good for Euro and Oil

4 mar 2017

Politics - Long-Term Deflation Risk
Anti-Establishment politician and policies in Great Britain, Brexit, and United States, Trump, were big winners in 2016. The domino effect of anti-establishment is also gaining ground in the European Union. Politics is playing out in Europe this year in favor of leaving the EUROcurrency . Netherlands, Italy, France, Greece, majority citizens are in favor of leaving the EUROcurrency . Obvious as member nations leave or even threaten to leave the EUROcurrency will devalue versus the USDollar. Germany is now considering leaving the EuroCurrency. Even Merkel herself, stated Germany would now be better off with the Deutsche Mark. If Merkel would lose the election this year, anti-establishment politicians in Germany could announce a date for a referendum to leave the EUROcurrency.

Monetary - Near-Term Inflation & Countermeasures
Inflation has been seen rising in nearly every major economy around the world. Central Bankers are aware and ready to take action to slow inflation risk. However, if there is a monetary paused response while new governments seek to grow there respected economies, this could cause rapid inflation. As you can see from the chart, EUROcurrency and oil over the years have had a converging relationship. Because recently oil has led while EUROcurrency has lagged, this could cause a spike in EURUSD . We should also consider the politics that are driving the divergence between both oil and EURUSD.

Key Dates - 2017

March 09 - ECB considering further tapering with inflation discussion
March 13/14 - US Federal Reserve meeting concerning interest rates
March 15 - Netherlands Vote / Wilder win gives advantage to leave EUROcurrency
March 23 - ECB final Targeted Long-Term Financing Operations TLTRO
April 1 - ECB Taper Bond purches 80 EUROcurrency month to 60 EUROcurrency month until December 2017
April 26 - BOJ considering further tapering with inflation discussion
April 27 - ECB considering further tapering with inflation discussion
May 7 - France Vote / Maria Le Pen is a vote to leave the EUROcurrency
May 25 - OPEC meeting / OPEC maintain cut or larger cuts would cause inflation
June 8 - ECB considering further tapering with inflation discussion
June 12/13 - US Federal Reserve meeting concerning interest rates
July 18 - Greece must repay 7 billion USD loan/ Greece already not committed
July 19 - BOJ considering further tapering with inflation discussion
Juy 20 - ECB considering further tapering with inflation discussion
Sept 07 - ECB considering further tapering with inflation discussion
Sept 19/20 - US Federal Reserve meeting concerning interest rates
Sept 24 - Germany vote / Vote against Merkel is a vote to leave EUROcurrency
Sept-Oct - Italy special election / Beppe Grillo is leading a popular anti-Euro movement
October 26 - ECB considering further tapering with inflation discussion
October 30 - BOJ considering further tapering with inflation discussion
December 14 - ECB considering further tapering with inflation discussion
December 12/13 - US Federal Reserve meeting concerning interest rates