The upcoming year will be the Year of the Rooster according to Chinese zodiac. This starts from January 28, 2017 and will last until February 15, 2018. Will the rooster bring prosperity to the financial markets next year?
In particular, 2017 is a Yin year, which means that it will be ruled by the fire element and that its color is red. While some traders associate the color red with losses or bearish price action, Chinese astrology suggests that this color can bring good luck when paired with colors that complement the fire element. Some feng shui experts say that the lucky color for the year will be blue.
Rooster or chicken ranks tenth among the Chinese zodiac animals. It represents fidelity and punctuality since it wakes up early in the morning to crow on time. Previous years of the rooster are 1981, 1969, and 1957. People born in the year of the rooster are said to be hard-working, courageous, and honest, and experts say that hard work will also be the key to achieving good fortune in the year.
Indeed, market themes are expected to be particularly challenging to navigate in the next twelve months. For one, political shakeups are expected to take place in the European region with Brexit negotiations set to begin by the first quarter of the year and German and French elections also scheduled. If the theme of populism carries on, Euroscepticism could topple the status quo in these major nations and even threaten the stability of the euro zone region.
With that, volatility might be particularly high, giving headlines a chance to spur huge price fluctuations similar to several instances this year. Election season might be tough on a currency, especially if candidates banking on the anti-establishment theme are advancing in the polls. Similar to 2016, surprise outcomes may lead to turbulent times in the financial markets.
It’s also worth noting that the chicken is considered a female metal sign in Chinese astrology, which is related to gold and precious gems. In combination with the red from the fire element, this could highlight the outlook for the year, possibly favoring precious metals like gold and silver throughout. Female metal is also associated with fog, which suggests plenty of factors that could cloud market trends.
This could be interpreted as a year that might contain a lot of noise in terms of financial themes but that underlying trends could stay intact. This might be applicable for the US economy, which is poised to go through a bit of transition period as president-elect Trump takes office. With his brash rhetoric and penchant for aggressive statements, market watchers may have to filter through the noise and identify which remarks actually carry weight in terms of influencing business conditions and economic performance.
Among Trump’s campaign promises are corporate tax cuts, healthcare overhaul, banking deregulation, and increased infrastructure spending – all of which have been welcomed positively by businessmen and investors so far, judging from the stock market performance in the past few weeks. Keep in mind, however, that Trump has also pledged to increase tariffs on imported goods and withdraw US participation from the North American Free Trade Agreement and the Trans-Pacific Partnership, which might have tremendous repercussions on global economic activity.
In any case, the President still has to go through Congress to make any of his proposed changes so there’s a chance that markets could react in panic to bold statements from The Donald. It might be worth waiting for the dust to settle before taking any trades or making portfolio adjustments based on these.
Speaking of global affairs, the combination of the rooster’s metal element and the fire element of the year could result to electric and hot atmosphere, which represents tension. Investors are cautioned to expect intense demonstrations of political nature or by big corporations. Electric reactions between metal and fire might also yield unprecedented volatility, as shifting political landscapes in Europe and the US could leave asset prices tossing and turning while market sentiment keeps shifting.
Emerging markets are still on the back foot, and perhaps even more so after the Fed’s likely 0.25% interest rate hike in December, which could keep a lid on global commodity prices. Emerging market stocks have been trading sideways for the most part of this year and monetary policy tightening in the US may keep gains in check. To add to that, potential trade tariffs on China and sanctions for currency manipulation could weaken the stance of the Asian powerhouse, thereby dragging down the rest of its peers in the region.
Flight to safety is also a potentially dominant theme for the year of the rooster, as markets could gravitate towards stability. This may favor the US dollar, which is enjoying support from relatively stronger growth, the perceived safe-haven appeal, and to some extent the Japanese yen if the pickup in global inflation falls through. Please rephrase
In a nutshell, the year of the rooster brings plenty of uncertainties to the mix, with the possibility of political clashes and a lot of market noise or volatility. Still, being persistent and hard-working as a rooster could pay off if one is able to filter out the noise and determine prevailing market trends.
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