In the Press

Industry comment

(Extract from FX Blueprint, January 2012)

2012 will be the Year of the Dragon in the Chinese calendar. Regional perspectives on the dragon may well characterise the challenges for 2012. In medieval Europe, unknown territory on early world maps was marked Hic Sunt Dracones (“Here be Dragons”). For the West, dragons represent uncertainty and danger, while for the East it represents power and auspiciousness. Whether both perspectives are realized for each region is perhaps the question for 2012. Our base case is that the Euro-area will enter uncharted territory in terms of policy responses, but the Euro-area will hold together. Meanwhile, we expect China (and the US) to avoid a hard landing. So we do tend to believe the biases inherent in each region’s perspective of the dragon, but we don’t subscribe to the more extreme outcomes being touted.

Click here to see our themes and trades for the year.