It started in Q3 of 2018, and it’s gaining momentum. Global growth fears are on the rise once again. People all over the world are already preparing for another financial meltdown, and that unfounded expectation might well cause the very thing we fear. So why are the fearmongers raising their voice?
Weak data is emerging from China, the EU, and the USA. The evidence of another financial bubble may well be forming, but it’s not all doom and gloom for forex traders. See the latest global updates and how online traders can actually benefit from a currency crash.
The foreign exchange market
The forex markets have been experiencing stormy weather for quite some time, and the central banks of the world are already starting to button up their coats in preparation of hard times ahead. Here are three currencies that were once believed to be bulletproof, but are now struggling to resolve growing issues. If you’re a cautious trader, perhaps these currencies should be avoided in the coming weeks.
CNY
Global growth fears have made it to China. Has the Shanghai bubble reached a breaking point?
China’s 6% – 6.5% economic growth forecast in early 2019 clearly shows a slowing of exports as well as domestic spending. Add to that China’s 20.7% fall in February, the lowest since 2016, and the idea of a coming crisis doesn’t seem like a conspiracy theory at all. Trade wars are not dominating the media anymore, but there are many underlying issues that are far from resolved. Tariffs and non-tariff barriers are forecasted to increase in Q2, which will likely cause additional volatility.
Expected CNY devaluations might be kept in check by a stable euro offsetting a bullish USD, but if the Euro doesn’t stabilize by the end of Q2—which is highly likely—USDCNY could become a wild ride beyond any analytic forecasting techniques.
EUR
Europe has many reasons to entertain global growth fears, but are they false indicators?
The European Central Bank announced a disappointing growth forecast fall for 2019 from 1.7% down to 1.1%, confirming a coming rate hike and a significant reduction of holdings. Global markets suffered a triple hit in Q1 of this year, which galvanized global fears of another financial crisis. A very mediocre US jobs report in February added to the downward growth forecasts coming from many other nations. To add even more negative sentiment to a struggling market, Brexit once again has taken center stage with the no-deal Brexit and 2nd referendum debate still not offering a definitive indicator of things to come for GBP.
USD
The FED says that global growth fears are without substance and should be ignored.
The US non-farm payrolls release last Friday dominated the weekend headlines and added to the global growth fears. The yearly wage inflation of 3.4% has already dropped to 3.1%, a 10-year record so far. Furthermore, the US Treasury note dropped down to 2.75%, hitting a 7-month-low. Debt is on the rise once again. US students collectively owe a staggering $1.5 trillion—more than double the estimates of 2009. Moreover, mortgage rates are on the rise showing a surge in 10-year bonds, which was—last time—a precursor for the property market crash that everybody wishes they could forget.
Should you take the global growth fears seriously?
As the world media slowly begins to focus on negative sentiment, the trading community can only standby waiting for an opportunity to present itself. For now, the financial world is ‘business as usual’ and if a crash is coming, it’s not going to happen in the next few weeks. Just make sure your Exness account is fully registered and funded for the coming shifts of 2019.
Consider avoiding a crisis. Sell currencies before they crash and buy on the rebound.
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