Markets: Volatility and risk appetite cycle to come to the fore in 2018 - ANZ

According to analysts at ANZ, the volatility and risk appetite cycle will come to the fore in 2018 and will come at a cost for those who have become accustomed to only using the DXY as their compass for broader FX market movements.

Key Quotes

“Statistical probability, the variability of economic growth, the broadening of the global tightening cycle and the decline in liquidity are all suggesting that volatility is due to rise in 2018. However, given the gradual nature of the decline expected in liquidity and the strong near term outlook for growth, there could be some time still before the regime shift occurs.”

“The key to managing risk in 2018 will be in understanding how aggregate global growth and broad liquidity are evolving, and what that means for market volatility, rather than obsessing over the slight nuances in US monetary.”