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Exciting 2010 is behind us, and it’s time to discuss what can happen in 2011. Here are the expectations for currency movements and also for trends in forex trading.

It’s very hard to make predictions for a full year, because so much can happen, but there are some trends that can continue or fade away. Let’s start:

  1. European debt crisis intensifies: High bond yields and the vast amount of money that troubled countries have to pay back in 2011 make another round or two of trouble inevitable. This debt is a heavy burden on the Euro. Printing money isn’t a likely magic solution to the crisis, as inflation can rise. Perhaps if troubled countries left the Euro, this could boost the currency, but this scenario isn’t likely. Spain will be the key country at the beginning of the year.
  2. US Economy improves: We’re already seeing positive signs from the US. With the Fed determined to support growth and not fear inflation, the US will grow, with inflation, rate hikes and a stronger dollar.
  3. Austerity will hurt the pound: Many of the austerity measures will come into effect in 2011, and will take their toll on employment. This in turn will curb inflation and not push for a rate hike. The pound will continue downhill.
  4. Yen will be frustrating: The Japanese yen might lose some ground, but the way will be choppy and frustrating for traders. There are two many forces moving the yen, and in too many cases, important events aren’t moving it at all.
  5. The Swiss franc will lose hot air: The Swiss franc reached new highs at the end of 2010, in safe haven flows. The strong currency will hurt the country’s economy and even without interventions from the SNB, it will retreat.
  6. Commodities will continue rising: It’s not only oil and gold, but also wheat and soybeans. People need food. This will have a significant impact on currencies as well, with exporting countries doing better than importing ones, and food inflation becoming more influential on economic policy and therefore on currencies.
  7. Loonie will make progress: After a choppy year, the Canadian dollar is likely to enjoy stronger oil prices, and much more importantly, a stronger US economy. It has room for some gains.
  8. Aussie will continue being attractive: Even with a slowdown in China, Australia will still enjoy a high interest rate, a sound economy and low unemployment. It may not beat the US dollar, but the it’s likely to leave European currencies behind. The Aussie will also become more attractive for traders – it’s volume already passed the volume of the Swiss franc, and it’s popularity will continue rising.
  9. Forex investment will gain traction: Forex social networks that allow automatically following other traders will undergo upgrades, and new networks will appear, making investment in forex traders popular, opening forex to many regular investors that stayed away from forex up to now.
  10. Less people will suffer forex scams: Maybe I’m being optimistic, but as the forex industry is growing up, with more regulation, it will harder for scammers to fool people, that are more aware of them, and know better how to avoid scams. They’ won’t give up on trying though.
  11. Your predictions!: I’d be glad to hear your what you think will happen in the world of forex during 2011. Anything goes: currency predictions, industry ┬ápredictions, white swans, black swans, etc.

Have a great 2011!