The upturn in trade and job numbers and positive market sentiment are fuelled by generous policy stimulus. While the illusion of plenty lasts, a sustainable economic recovery built on business and consumer confidence must take root.

The recent US dollar sell-off raises questions about confidence in the world’s dominant currency, but the fact remains it has no peers as a reserve asset. The woes of the US economy notwithstanding, the dollar will bounce back, as it has always done.

The amount of money earmarked for European recovery is huge, with scant regard for the consequences. Both the EU and China need more bilateral trade to stand any hope of a stronger recovery this year, but concessions and compromise will be needed.

In a world of rising unemployment, governments must focus on job creation initiatives and look out for workers’ rights when firms attempt to put profits above people.

Trump’s business-friendly tax bonanza has come at a cost and the US’ deteriorating economic fundamentals are in need of repair. Democrat presidents are usually written off as tax-and-spenders but recent experience suggests otherwise.

While the prospect of Britain crashing out of the European Union without a deal looks likely, Brussels is famous for last-minute compromises. However, UK financial markets are vulnerable without the country charting a strategy for long-term industrial revival.

Now is not the time to consider fiscal austerity, debt deflation or balance sheet restructuring. Sustained fiscal and monetary super stimulus will be needed for years.

The US-China trade war, Donald Trump’s ‘America first’ policies and the marginalisation of global institutions have hurt the world’s ability to deal with the economic and health crisis. China needs to forget about export-led recovery and go for growth at home.

Higher trade tariffs and disruptions to supply chains due to a no-deal Brexit might push British manufacturers to relocate. The risk of an entrenched depression is real, and neither Europe nor China would come to the UK’s rescue.

Governments must not turn a blind eye to firms engaging in radical overhauls such as increased lay-offs and reduced benefits in the pursuit of greater productivity and profits. Ignoring underlying issues such as inequality and exploitation of workers will only make it more difficult for the global economy to return to full health.

Germany and China are the workshops of the world, and the best places to see early shoots of recovery. The latest German business sentiment data and Chinese factory numbers suggest that better times might be around the corner.

The Franco-German €500 billion recovery plan is a mere drop in the ocean. Over the years, Germany has opposed quantitative easing and other perceived risks to financial stability. But, to save the euro, it must support a level playing field for the EU.

Beijing has the strong US dollar to thank for making its exporters happy by keeping the renminbi soft. But economic and political risks in the US may yet end the dollar’s rally, which would leave Beijing in a dilemma about whether to intervene.

For as long as the Covid-19 pandemic rages on, dollar dominion is not in doubt. But if US economic data continues to deteriorate and the Fed comes under pressure to adopt a negative rate, investors will look for better returns elsewhere at the first opportunity.

The strong performance of supermarkets and surging demand at online retailers are proof that consumer demand is far from down and out. In manufacturing powerhouses like China and Germany, the first green shoots of recovery will emerge.

This was supposed to be the year Europe and China sorted out their differences over trade. There is a lot at stake as each is a top trade partner of the other, and euro weakness means China might need to worry about its holdings of the currency.

To change investor psychology towards the renminbi, Beijing must not only improve monetary policy transparency and open up financial markets, but also support international bodies like the IMF and World Bank.

The optimism of the US stock rally last week may look misplaced, but the nature of economic cycles should give confidence that the world will bounce back – even if the recovery is more likely to be gradual and U-shaped, than sharp and V-shaped.

The people best able to cope with the devastation of Covid-19 should be the ones to shoulder most of the financial burden of ill health, lost production and massive job cuts.

The American people need to have faith that their president has their interests at heart and that the economy will spring back. Trump must carry out policy for the long haul, and this means ending the unnecessary trade war with China.

The coronavirus crisis raises the question of whether hedge fund activities should be reined in or more closely monitored. Making money out of market disorder may be permissible, but profiting from an abject global tragedy should not be.

The ECB missed an opportunity to walk in step with the US and Britain and cut interest rates last week. In addition to pumping liquidity into the market, the ECB must shore up high-risk bond markets and ban speculative short-selling.

Rather than focusing on interest rate cuts, major economies must coordinate policy action, along the lines of the Marshall Plan, to propel growth in the less-developed world. Given the size of military spending, resources for such a strategy are available.

Central bank monetary policy easing will not go far enough. In Europe, where interest rates are already negative, only massive public spending will prevent Germany, France and Italy from heading into recession.

The Fed’s loose monetary setting is propping up a stock market rally and low job numbers cannot hide the middling GDP growth rate. The US needs a policy correction, and Trump, who has overseen ballooning budget and trade deficits, is not the right person for the job.

Boris Johnson is clearing the decks for a massive public spending binge to revitalise the economy. The cornerstone is a rail project that is running over budget and might involve the Chinese. Markets are wondering who will pick up the tab.

Germany must ditch its fiscal conservatism and put its budget surplus to work. An ultra-loose monetary policy in conjunction with over-tight fiscal policy is hampering growth and distorting the euro zone yield curve.

More policy accommodation in the form of easier credit and fiscal stimulus from Beijing looks likely. The Federal Reserve must go the extra mile and consider another interest rate cut.

Central banks seem committed to loose monetary policy, which means the wall of money they created since the 2008 financial crisis needs to find a home. Negative yields in mainstream bond markets will push investors towards equities.

The euro could be a major winner in the currency markets this year, as world trade and the German economy get back on track. If the euro rallies against the dollar, there are important implications for China’s currency reserve management.