The coming 2017 would turn out to be challenging for euro.
The common-European currency would be affected by the course and result of elections in the key countries of the eurozone – in Germany and in France. If in FRG the situation at the end of this year looks quite predictable — Merkel will go for another term, while the French elections might play tricks in the style of USA elections or Brexit vote.
By the way, the course of divorce of the EU and Great Britain will also affect the euro quotation.
The increasing impact on euro might be exerted by the lifting or easing of sanctions against RF. But here it is difficult to forecast anything.
It stands to mention separately the differences in sentiments at European Central Bank (ECB) and at Federal Reserve Bank (FRB) of the USA. At the end of 2016 FRB raised the interest rate and even promised that in 2017 it would repeater that action yet thrice. In its turn, European CB, on the contrary, extended the asset purchase programme to the end of 2017 (although initially it was planned to close in March 2017).
Such opposite directed actions of the American and European regulators can result in further cheapening of euro against dollar and vice versa. To the extent that during 2017 1 dollar would come up in price to 1 euro.
However, just decisions of ECB and of FRB are not enough. On 20th January 2017 Donald Trump, who promised to pursue protectionist policy, will assume office as the president of the USA. On one side against the background of this event the interest to dollar might strengthen. But, on the other side, the Trump presidency consists of the element of unpredictability, which can force investors to prefer a wait-and-see approach.
Furthermore, the statement of the government of the United Arab Emirates, which repeatedly threatened to take money out of the U.S. investment funds, tells against dollar. And yet another thing — looming discords between Trump and the government of China on the status of Taiwan... In light of trillion American – Chinese trade turnover the political disputes cannot but affect the value of the dollar.
As far as rouble is concerned, then here traditionally it is necessary to follow the trends in the oil market. The treaty of OPEC, which presumes oil production cut, takes effect as from 1st January 2017. The decision of global oil producers headed by OPEC provides for cut in oil production by 1.2 million barrels per day up to 32.5 million barrels. The oil production cut should raise the crude oil price. If barrel gets more expensive – the Russian currency would strengthen.
There are two weak points in this optimistic scenario. First, the parties to the treaty must fulfil their agreements. The first reports on oil production in January, when the treaty takes effect, will appear just in February. And thereafter we will get everything clear.
Second, if Donald Trump would officially confirm his plans on support of the shale oil producers — fossil oil might sharply cheapen. And following this the rouble would fall.
In the longer term the condition of the rouble would be affected by the accuracy of payment by Russia of its external debts, as well as weakening / strengthening of ant-Russian sanctions.