In a nutshell, my verdict on monetary policy in the year ahead is: more monetary policy divergence in the first half and less monetary policy divergence in the second half of the year, which, in terms of the financial market’s jargon, means less distortion from unconventional monetary policies, a gradual return to monetary policy normalisation and steepening yield curves. 4.
FINANCIAL MARKETS PROSPECTS IN THE YEAR AHEAD A. THE US DOLLAR DOMINATES FOREIGN EXCHANGE MARKETS  I turn now to foreign exchange (FX) prospects for 2017. 2016 was the year that shook up currencies: sterling took a beating, while the dollar continued to march ahead; in real effective terms it has appreciated by more than 6% since August (Figure 8).