Heroes of Ukraine

«Market Leader» - news and previews making you rich.

Sunday, 25 October 06:19 (GMT -05:00)



Foreign exchange market

NordFX Sums Up On 2018 and Makes Predictions About 2019


Summing up and making predictions for the next year has become a good tradition at the end of each year. According to NordFX expert John Gordon, Deutsche Bank summed up on the results of its work in 2018. The actual result turned out to be a loss. In particular, it turned out that around 93% of all the assets owned by the bank have depreciated as opposed to that value in January 2018. This is the worst financial performance in 118 years! 2018 beat even 1920 when 84% of the assets decreased in value.
 
International experts say that the key reason for this poor financial performance was an extremely easy monetary policy, which then was changed for a very tough one. The thing is, the U.S. Federal Reserve raised the interest rates 4 times last year. This was more than enough to devalue most of the assets out there and even trigger a prolonged recession.
 
President Trump openly says that the Fed and its Chairman Jerome Powell are insane. He urges the American financial regulator to stop those interest rate hikes but those calls remain unnoticed. In December 2018, the FOMC raised the key interest rate by 0,25%. In 2019, only 2 FOMC members expect the rate to be increased up to 2,5%. The other members expect a much bigger rate hike. December's intrest rate decision triggered a wave of crashes in financial markets. For example, for Dow Jones, this was th worst month since the Great Depression in the 1930s. According to Bloomberg, this market crash resulted from the fact that the world's 500 richest people had lost 511 billion dollars. Founder of Facebook Mark Zukerberg turned out to be the biggest loser in this crash, losing 23 billion dollars.
 
When it comes to Forex, the common European currency surprisingly managed to get much stronger against the U.S. Dollar in February. EURUSD peaked at 1.2555. But then the situation changed, being influenced by the difference between the monetary policies pursued by the ECB and the Fed, as well as the issues with Italy, an overall economic slowdown in Italy, and the difficulties with the Brexit agreement. Later on, in mid-November, the currency pair dropped all the way down to 1.1215.
 
A similar picture was seen in the GBPUSD market. First the currency pair peaked at 1.4375 in mid-April but found the bottom at 1.2475 in December. All in all, GBPUSD lost 1900 points in 8 months.
 
The Japanese Yen was seen by investors mostly as a safe-haven asset within the context of a possible escalation of the trade conflict between the United States and China. Since the conflict never escalated in late 2018, USDJPY found itself around 111.00, which is the pivot point of the last 2 years. All in all, the currency pair lost some 200 points in 2018.
 

2019 Forecast

 

Some analysts treat the events of 2018 as the start of a prolonged depression. The doomsday forecast is intended for the USa in the first place. The 2-year U.S. T-bond yield has already dropped. At the same time, the 10-year U.S. T-bond yield has crashed all the way down to the 7-month low, which is seen by international experts as a sign of a economic depression coming.  
 
There is another story with Europe, despite the fact that the ECB cut downgraded their forecasts on inflation and economic growth. The year of 2018 showed everyone that the trade wars started by Donald Trump are not as scary for Europe as one might think. Still, the common European currency and the British Pound are still pressed by the challenges related to th Brexit.
 
However, we should keep in mind that the 90 days of peace in the trade war between the USA and China will be over soon, which brings an extra layer of uncertainy to all financial predictions in general and those related to USd in particular. Still, the forecast given by the world's leading banks and financial agencies look pretty similar. 
 
Bloomberg expects positive dynamics in the EU exports. They also expects a improvement in the German motor industry as well as higher salaries. As a result, the Eurozone's money and credit policy may normalize and bring EURUSD up to 1.2 by the end of 2019.
 
Morgan Stanley also think that 2019 is probably going to be a difficult year for the U.S. Dollar and recommend that their clients should buy EUR amid the forecast of a stronger inflation in the Eurozone. They expect EURUSD to reach 1.18 in 2019.
 
As for the near-term forecast (the first 3 months of the year), the experts are mostly optimistic about the Euro. Societe Generale and CIBC Capital Markets expect a move up to 1.17. TD Securities names 1.19. Lloyds Bank think the Euro may well increase up to 1.24.
 
Other experts, including Citi and Barclays Capital, are more cautious about making predictions for EURUSD. Some of them don't deny the scenario when EURUSD goes down to 1.13 and 1.12 but then may reverse to reach 1.18. The lowest point stated in various forecasts is 1.11.
 
JPMorgan Chase experts anticipate a recession in the American economy because Trump's financial stimulation will definitely end at some point while the Fed's policies are definitely not expected to back the economy with cheap money. The Eurozone economy will probably take the lead. While expecting an interest rate hike from the ECB, the market players will probably start pushing the Euro higher against the U.S. Dollar. However, this hike is expected to take place in the second half of the year, which is probably why most experts say EURUSd may plunge down to 1.11 in the first half of 2019 and then move all the way up to 1.18 in the second part of 2019.
 
As for GBPUSD, JPMorgan Chase anticipates the currency pair to move up to 1.3 in Q1 2019, with a further rally up to 1,37 by the end of the year. However, this scenario holds true only if the Brexit goes smoothly (the likelihood is 40%). If the UK quits the EU without a major agreement, this will drop the British Pound at least 10% down against the U.S. Dollar. If the Brexit is canceled, the currency pair is expected to gain 10%.
 
The Japanese Yen is expected to weaken against the U.S. Dollar in the first half of the year. USDJPY is expected to increase up to 112 and may be even further up to 118. This may happen due to the bigger foreign investments in Japanese companies and worse trade balance.

 

 

You are free to discuss this article here:   forum for traders and investors

 

Add to blog
Got a question? – Ask it here »
 

Forex Consolidation. EUR/USD and GBP/USD

The stock market has been ambitious in its attempt to eliminate September's retracement and take the "blue wave" into account but the forex market has been more conservative recently in terms of restoring risky bets. However, when it comes to the stock market, each and every scenario out there eventually boils down to the smart money, which cannot but affect the international currency market. Still, there are many questions to be answered yet, which makes it really difficult to make more or less clear predictions.

Publication date: 12 October 10:58 PM

Tape Patterns Indicator

Traders often use various kinds of technical indicators these days. The list can be rather long, from popular ones like RIS, MACD etc. to less popular ones like Tape Patterns.
Publication date: 30 September 08:52 AM

Bitcoin's Getting Ready For a Strong Rally

While Bitcoin could have been more volatile over the recent weeks, the king of cryptocurrencies stoped in the range between 10K and 11K dollars per coin. Do BTC miners know in which way the coin is going in the near future?

Publication date: 30 September 04:07 AM

Bloomberg: Crypto Is Better Than Gold In 2020

According to the recent Bloomberg report, cryptocurrencies are way better than gold in terms of investments in 2020. Which is interesting, most cryptocurrencies have been growing much faster than gold this year. It's not a secret that gold is considered a safe-haven asset amid crises. Bloomberg Galaxy Crypto Index (BGCI) has gained 66% this year,while gold has gained only 20% over the same period.
Publication date: 29 September 01:07 PM

Gold Prices Drop Below $1860/oz, Seeing A Major Downtrend

On Thursday morning, the spot price of gold dropped roughly down to $1850/oz withing the scope of a strong downtrend started earlier this week, with a strong gap from the consolidation level. The key factors contributing to the price drop was the sudden strengthening of the U.S. Dollar.

Publication date: 25 September 07:39 AM

Texas Authorities Spot New Crypto Scams

The TSSB, which is the financial regulator of Texas, is reported to have revealed a couple of potential scams in the international market of cryptocurrencies. These are named Forex Birds and PEK Universe. From now on, both of these projects cannot work in Texas anymore. These projects were banned on September, 3rd.

Publication date: 18 September 01:07 PM

Cryptocurrencies On Sale: ChainLink and TRON Go Down, Bitcoin Is Stable

Wednesday's session is bringing a retracement in the market of digital assets, which is affecting the entire crypto market cap. Chainlink (LINK), TRON (TRX), and Tezos (XTZ) have been the biggest losers over the last 24 hours. They lost 9,7%, 8,7%, and 5,5% respectively. Bitcoins remains stable and one of the very few tokens among the top 20 that are still showing some gains, though modest ones.

Publication date: 16 September 12:04 PM

What's Next For Bitcoin?

Some analysts argue the future of Bitcoin, also known as the digital gold. Last week, the Winkelvoss brothers stated that the BTC price may skyrocket all the way up to 500.000 dollars per coin in the near future. This opinion is shared by Bloomberg analysts. But on the other hand, Bitcoin may see the opposite scenario, which is a major crash to make it as cheap as dirt.

Publication date: 10 September 03:00 AM

How To Get Ready For Bitcoin Boom 2020?

Cryptocurrencies keep on growing in value. If you are going to buy your first coins, this is what you should do first.
Publication date: 30 August 11:27 AM

U.S. Tech Companies Increase Stock Buyback

Publication date: 20 August 06:10 AM