How To Prepare For The New Trading Year

Approaching the New Year 4 themes stand out for forex traders. We restrict our analyses to 8 countries/regions as shown (liquidity, share of transactions). #1 Commodity currencies are very weak AUD, CAD and NZD with NZD as the safe haven of this group (non-oil exports, solid economic management). #2 Also very weak is the GBP as the UK even after 45 years of membership can't decide whether to be in or out of the EU. #3 Very strong currencies are USD, JPY and CHF and #4 being neither very strong nor very weak the EUR.

We expect trade issues to dissipate but not disappear, and dissipate enough to bring back a global economic recovery of sorts, helping the USD, the commodity countries but harming the JPY and CHF (the latter even being close to selling intervention). GBP is due for a strong rally during 2019 as the executioner's sword finally severs the head from the body. EUR is due for a downwards correction mainly for political reasons.

So all up we like the USD as the best major, and the GBP as the best bet especially if there is another big leg down which we doubt seeing ourselves as lonely bulls prepared to enter the capitulation if any occurs. On trade we see China waiting out the lame duck Trump Administration which will end in two years. A boom and bust is possible for USD and US economy during 2019 but not for the first half year.

Not bad

Have thought some about the new Year.
Europe ongoing and growing dissension with the ruling elite as recovery fails to materialize. Stuck in Mud and going nowhere.
US: Democrat party has overplayed its hand and the very people it so long has relied upon for voting base start to realize that the people they elect on auto pilot are the very ones allowing the decimation of a culture via inaction on Drug interdiction and hiding in the shadows illegals undercutting job availability.
Initial start of year there is going to be much friction in Washington but Truth as to cause and effect will prevail. That is unless Trump administration proves completely incompetent in properly advocating a Core vision.

UK needs different leadership to bring country together. Plenty of time to wait for some resolution unless a trader is very accomplished day trading GBP only.

USD still looks the best as repatriation continues. Opportunity abounds in US for those willing to take a hard look at oversea risks rising as US remains stable.

Commodity currencies still are bedeviled by overcapacity in a world of constricting debt growth.

Interesting perspective/analysis/guidance @AnnLi as always.
To add to this.. an interesting snapshot looking forwards are the implied volatilities of currency pairs ..
dec17th here: https://www.econotimes.com/FxWirePro-GBP-JPY-IVs-highest-among-G10-FX-pool-ahead-of-BoE-and-BoJ-monetary-policies--Bid-2m-skews-and-hedge-1474027
but best update. GBP offers most interesting but high risk trading opportunities among Majors. We continue to hold our long term short ItM position, obviously with tightened fading/hedge/stop thresholds reflecting the political uncertainty regarding Brexit. A very difficult time for purely technical traders.
Thank you for your post.

Thank you AnniLi for your considered and thoughtful comments. I think you are correct in your analysis.