Heroes of Ukraine

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

Thursday, 23 May 07:55 (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 and Cryptocurrency Forecast by NordFX. May 20-24, 2019

Roman Boutko, an analyst for NordFX, has come up with another consensus forecast for the forex and cryptocurrency markets for the forthcoming trading week starting on May 20, 2019.


Publication date: 20 May 03:50 AM

U.S. Sanction Trap For Russian Rouble

It's not a secret that the amount of sanctions against Russia has been growing over the last few years. At the same time, experts are losing faith in the stability of the Russian Rouble. Washington is discussing more and more variants to impose even more sanctions on Russia to undermine its economy and national currency.

Publication date: 18 May 03:25 PM

Facebook articles contest from FortFS

FortFS offers you to show off your writing skills and compete with other traders for a prize fund of 1000 USD, which will be distributed among the authors of the most interesting articles about our company!

Publication date: 18 May 12:24 AM

BTC Market Will Set New Highs In 2020

Tom Lee, Chief Analyst for Fundstrat Global Advisors, has recently shared his optimistic view on the future of Bitcoin (BTC). In early May, he said that the BTC exchange rate is undervalued and, given some fundamental factors, it should be somewhere around 14K dollars per coin. At this point, he thinks that the current all-time highs may well be renewed this year. This means BTC prices above $20K per coin and market cap well over 830 billion dollars within the next 20 months.

 

Publication date: 15 May 10:05 AM

U.S. Unemployment Rate Drops To Nearly 50-Year Low

The U.S. Department of Labor has released another unemployment reports. For the first time in over 49 years, the unemployment rate dropped all the way down to 3,9%. For the most part, this has to do with a considerable decline in the economically active population.

Publication date: 13 May 11:22 AM

Six main components of Alpha Bonus from FortFS

From 06 of May till 07 of June 2019 become the owner of a unique artifact called Alpha Bonus and subdue the financial element!


Publication date: 13 May 01:40 AM

Bitcoin Reaches 5-Month High

The cryptocurrency has been maintaining a stable bullish trend. over the last few days, the market cap has exceeded 185 billion dollars. According to CoinMarketCap, the market cap used to be 179 billion dollars on Tuesday. Over the last few days, the cost of all the cryptocurrencies circulating in the global market has grow considerably. 

 
Publication date: 27 April 10:24 AM

ETH's At Local Highs: What's In For Ethereum And ICO?

Ethereum is back in the game! It's currently trading around 5-month lows. Still, the market seems to be showing some confidence that the coin has already overcome its existential crisis and managed to recover from crisis that started after the ICO bubble burst in 2018. Will ETH and ICO revive?

Publication date: 17 April 10:42 AM

NordFX Shares Another Forex and Cryptocurrency Forecast for Mid-April 2019

The balance of powers in the international currency market (also known as forex) influences many contemporary tendencies in the entire world. At the same time, traders and investors rely on accurate forex forecasts to earn money. That is why we keep on publishing those weekly consensus forecasts, courtesy of NordFX.
Publication date: 15 April 10:54 AM

Weekly Forex and Crypto Prediction by NordFX. Mid-April 2019

Any exchange rate between any two currencies is the result of multiple factors affecting the currency pair at any given moment. At the same time, those exchange rates themselves are actually capable of affecting other processes important to specific countries and even the entire world.

Publication date: 09 April 11:01 AM