2019 Forex market trends traders should know

April 15, 2019, | AtoZ MarketsThere are some number of factors is inhabiting the growth in 2019 as volatility is rising, stocks are falling, borrowing costs are increasing, credit is tightening, housing is slowing and earnings growth is weakening for the slowdown in global economy.  The Forex Market 2019 trend is expected to be volatile at least until the middle of the Year due to some important uncertainties.

USD might affect due to economic and political challenges

2018 was a phenomenal year for the USD when the trade-weighted Dollar Index appreciated nearly 5% and is up more than 9% from its low in February. From the beginning of 2019, there was a zero forward momentum for the USD. Now the question is whether the greenback can continue the gain of 2018 or it’s going to reverse. Either way, 2019 is going to be a challenging Year for USD as America’s economic expansion comes to an end.

Chinese clients are also reducing spending, which adds to the pressure on U.S. businesses. 2019 will also be a year of some economic and political challenges in the U.S. With the spur from tax cuts fading, the weakening economy, decline in stocks, rise in interest rates and divided Congress will keep President Trump’s hands tied.

EU hurt badly by Trump's trade war

The political and economic situation is getting darker by the day. Italy electing a radical new coalition that challenged the Eurozone budget rules, France seeing week after week of rebellion in the streets over new taxes and Germany’s Angela Merkel seeing her grip on power diminish to the point where she decided to not run for party leader again. The business sentiment of the EU was hurt badly by Trump’s trade war rhetoric.

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There was an improvement in unemployment of EU which becomes the lowest level since the global financial crisis along with PMI circling the drain at 52.7 just a few points away from the 50 boom line. To stabilize the market and continue the growth in 2019 the Trade will play a significant role. On the other hand, to accelerate the economy no deal BREXIT would have to be avoided, US-China trade tensions would need to cool and Trump would have to drop his threat of increased tariffs on the EU auto sector.

Brexit dominating the GBP trade

That story of BREXIT is dominating the pound trade from the beginning of the 2019 and GBP is still in the state of uncertainty as to how the UK exit from EU will unfold. If UK Parliament approves Theresa May’s BREXIT deal with EU the GBP will be stronger against all other major currencies while with no agreement in sight UK policymakers could simply exit the EU without any deal and it would make the GBP weaker immediately. 

The UK Services PMI - a measure of the 72% of UK GDP is within a fraction of slipping into contractionary territory. Consumer confidence is lower while Retail Sales and employment have held up remarkably well with the unemployment rate at its best levels since the early 1970s and earrings have risen at a better than 3.3% rate on a nominal basis indicating that incomes continue to grow. But the market is expected to be volatile till the Tension of BREXIT ends.

Japan fight against deflation

The BOJ is planning for a moderate improvement of the economy with the increase of money supply that might reduce the currency value until the middle of 2019.  PMI Composite printing at 52.4 at the end of 2018 compared to 52.8 at the start of the year and the household spending which rose to a very healthy 2.0% at the start of the year only to plummet to -0.3% by the end of it. If The CPI contracting from 1.4% at the start of 2018 to just 0.8% at the end of the year while the unemployment at only 2.4%.  Moreover, 2019 looks particularly challenging for the Japanese economy as the fight against deflation shows little stable success while global growth trends look particularly threatening for the export-driven economy.

US Mexico Canada agreement 

Over the past year, the LOONIE lost more than 7% of its value against the greenback and 10% of its value versus the Japanese Yen. The main reason for the decline of the currency value is the OIL & US Dollar. The price of Crude Oil has fallen 25% in last year. The Main factor for CAD in 2019 will be the U.S. Mexico Canada agreement and the decision of OPEC Countries about the OIL Price.

AUD & NZD is expected to struggle

In Last Year, the AUD fell 10% against the USD and 6% against the EURO with AUDUSD ending the year at 2 almost 3-year lows. In the coming Days if the US-China trade war doesn’t end the AUD will seem to be weaker against other currencies. There is a divergence in the AUD & NZD while AUD falls 10% against USD and NZD fall only 5%. The reason for the divergence is that the Chinese are more reliant on Zealand’s exports of milk, butter, cheese, meat and infant formula than Australia’s exports of hard commodities. NZD is not expected to be weaker for Chinese and global growth in 2019, but low-interest rates and government spending should make it a covered year for the economy.

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