The US dollar was among the top losers in 2017, being down over 10% against a basket of major world currencies. The dollar index started its bearish acceleration at the beginning of the year, and held a steep descend until September when it entered a consolidative phase that extended until the end of the year.
The greenback remained under strong pressure throughout 2017, despite the Fed’s three rate hikes, with negative sentiment being maintained by geopolitical tensions and persisting concerns about President Trump’s tax reduction plan, which was eventually passed in late December. The outlook for the greenback remains negative, as bearish technical studies favor extension of broader weakness into 2018.
A weaker dollar kept its major counterparts well supported, with the Euro rising over 13% in 2017 – on a strong rally from the pair’s yearly low at 1.0340, which probed above the psychological 1.2000 barrier and hit the highest levels in two years.
The European Central Bank (ECB) kept its ultra-low interest rates unchanged in 2017, but cut its bond-buying program from 60 to 30 billion euros per month, and decided to extend it beyond September 2018. However, the ECB’s efforts to limit the Euro’s gains were unsuccessful, with signals of further advance on firm break above the 1.20 barrier in 2018.
The British pound extended its post-Brexit recovery in 2017, and gained nearly 14% against the dollar. Investors continued to buy the pound despite a lot of concerns about Brexit negotiations, sending the British currency to the highest levels since the Brexit vote. The Bank of England raised interest rates in 2017 for the first time in over a decade, signaling an end to ultra-low interest rates due to global crisis.
The pound was initially lower on gloomy forecasts for growth which ruled out the prospect of further rate hikes before 2020, but regained ground and continued to trend higher, driven by strong bullish sentiment.
Cable’s bulls are eyeing important barrier at 1.40, with firm break higher expected to spark fresh acceleration higher in 2018.
The Japanese yen was up around 5% against the greenback in 2017, appreciating on geopolitical tensions throughout the year, which raised demand for safe-haven assets. The Bank of Japan did not express much concern about the yen’s advance, which was seen beneficial for Japan’s exporters and at the same time helping to boost inflation.
Commodity related currencies, Australian and Canadian dollars, benefited from rising commodity prices and recorded gains against the US dollar. The Loonie was up over 6% in 2017, while the Aussie dollar advanced over 8% against its US counterpart.
Commodity markets were in strong recovery mode in 2017. Crude oil, base metals and precious metals registered strong gains during the previous year.
WTI oil was down in the first half of 2017, falling from a high of $55.22 per barrel in January to $42 per barrel in June, which marked the lowest level in 2017. A recovery rally commenced from there and peaked above $60 per barrel in the last trading day of the year, marking yearly gains of nearly 11%.
Brent Crude oil peaked at $66.60 at the end of the year, in a rally from a yearly low at $44.35 posted in June, registering over 16% gains in 2017.
Oil prices were strongly supported by OPEC’s efforts to eliminate negative impact from global oversupply, which kept oil prices pressured by cutting global oil production.
Cartel managed to attract other major oil producers to join the common action in output cut, which showed good results and was extended in 2018, as oil markets are showing strong signs of tightening.
Spot gold advanced in 2017 as several global geopolitical crises prompted investors into safe-haven assets, also being strongly supported by a weaker US dollar.
The yellow metal ended 2017 trading at $1300 zone after rallying from annual low of $1146, peaking at $1357 in September, followed by correction to $1236, before rallying again. Gold registered gains of over 13% in 2017, with a positive outlook for 2018 according to technical studies.
Copper was the top winner among metals with over 31% rally in 2017. The metal was supported by strong data from its biggest consumer China, and concerns of shortages due to efforts to fight pollution.
Copper’s price reached the highest levels in 3 ½ years in late December, in extension of a steep rally which commenced in June 2017.
Global equities continued to benefit from accommodative policies by major central banks which sent investors into more profitable assets.
From the European indices, the German DAX advanced by 13% in 2017; the French CAC40 index was up by nearly 10%.
Britain’s FTSE 100 index was up around 8% in 2017, despite the Bank of England’s decision to start tightening policy after more than a decade.
Japan’s Nikkei 225 was among the top gainers in 2017 with a 19% advance for the year, benefiting from loose policy and the Bank of Japan’s expansive asset purchase program.
However, US stock market benchmarks were the best performers of 2017. US stock indexes hit a series on new all-time highs in 2017 amid President Trump’s tax reform plan and proposed infrastructure stimulus, widely ignoring the FOMC’s three rate hikes in 2017.
The Nasdaq index, which is dominated by technology stocks, advanced by 32% in 2017 and ended the year near a new record high at 6545; the S&P 500 index was up almost 20% and hit a new all-time high at 2697 in December, while the Dow-Jones rallied over 25% in 2017 and posted new record high at 24895.