OUT OF CONSENSUS AND FALSE POSITIVES

China's yuan is much in the news of late owing to its inclusion by the IMF as a reserve currency status.

That raises the question of who gets get hurt in the process?

According to a Bloomberg report, The euro’s worst year in a decade is looking even grimmer after the Chinese yuan’s inclusion in the International Monetary Fund’s basket of reserve currencies.

The 19-nation currency’s weighting in the IMF’s Special Drawing Rights basket will drop to 30.93 percent, from 37.4 percent, the organization said Monday. The yuan will join the dollar, euro, pound and yen in the SDR allocation from Oct. 1, 2016, at a 10.92 percent weighting.

 The euro will get the most impact from this weight adjustment,” said Douglas Borthwick, head of foreign exchange at New York-based brokerage Chapdelaine & Co. “The IMF is taking from euro to give to China; the other rebalancing amounts are largely negligible.”

 In other currency news, in what Morgan Stanley says is an "out-of-consensus" 2016 prediction, the firm expects:

The yen will outshine the dollar as next year’s star performer in the $5.3 trillion-a-day global currency market, according to Morgan Stanley.

In what it calls an "out-of-consensus" prediction, the bank said it expects Japan’s currency to strengthen to 115 against the greenback at the end of 2016. That contrasts with a median forecast for the yen to weaken 126 per dollar, according to analysts surveyed by Bloomberg. 
Morgan Stanley’s top trading recommendations for next year include buying the yen against the British pound, Swiss franc, South Korean won and offshore Chinese yuan, according to a Nov. 29 report


In other what we would label  "Hello News," the WSJ today noted: "Euro Won't Win Inflation Fight for ECB."

For Europe, 2015 is ending much as it began: with intense expectation of action from  Mario Draghi and the European Central Bank. But as the ECB delves ever further into unconventional territory, the considerations for policy makers are growing more complex.
From a purely economic point of view, the urgency with which the ECB president has been approaching further easing has been puzzling. Eurozone growth has held up in the face of global wobbles, core inflation has been moving slowly up and forward-looking indicators suggest continued progress. It isn’t even clear that boosting bond purchases or cutting rates further will significantly affect the underlying economy.

But market expectations of action are high—and were building even before Mr. Draghi’s recent dovish comments. That reflects the real fight the ECB has on its hands: one related to perceptions of its ability to bring inflation back to its target of “below, but close to” 2%.

What holds true here will most likely prove true for those other central banks chasing an imaginary lab number that if and when it does arrive will turn out to be a false positive.