Convergence could ignite volatility, says TD Securities

As convergence of macroeconomic conditions gathers pace in 2018, rotation of capital will favour non-dollar assets

Flourishing euro
Green shoots: the ECB will not stand in the way of a stronger euro if growth is good and inflation is moving back to target

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The dominant theme of 2016 was the emergence of divergent monetary policies between major economies, while 2017 has brought convergence to the fore as the European Central Bank (ECB) and Bank of England move towards policy tightening, in the footsteps of their US counterpart.

“2017 was a watershed year, when divergence gave way to convergence of macroeconomic and financial conditions among large, developed economies,” says Ned Rumpeltin, European head of FX strat

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