Activity on the global financial markets fell noticeably during the pre-Christmas week that began when most of the trading floors closed.
Summing up the outgoing 2018, it can be noted that it was not easy for the global economy and, in our opinion, turning. First of all, the start of full-scale trade wars by US President D. Trump against all of its trading partners without exception was a negative surprise. The most visible and vivid were the "combat" trading actions against Europe, Canada, Mexico, and China. If in respect of the first Trump considers himself and the States winners, then with the PRC the trade blitzkrieg did not work out and gradually turned into a positional "war", the prospects for the end of which are not yet clear. It was this event that became the catalyst that led to the collapse in world markets and forced investors to recall that in the economic process there are not only booms but also recessions, turning into crises.
The first signals of slowing the global economy began to manifest themselves in the summer of the outgoing year. The economies of the United States, China, and the eurozone, and they are the largest in the world, have begun to show a slowdown in economic growth, which has worsened in the wake of the trade confrontation between Washington and Beijing. Almost a ten-year economic cycle, we believe, is coming to an end. And here, the eccentric presidency of D. Trump can only be viewed as a kind of catalyst, which only helped to show the status of the global economy and nothing more. On the contrary, his tax reform helped delay for some time the process of slowing the growth of the American economy, and the trade war with China, its potential vulnerability.
Evaluating the entire process, we believe that the fall in US stock indices, and after them, other global ones, will continue against the background of the main reasons described above, therefore we consider it necessary to continue to "short" the American stock market. With regard to the prospects for the foreign exchange market, then on the general wave of pessimism, as well as real uncertainty factors, we should speak about the continued growth in demand for defensive assets, including the Japanese yen and the dollar. In the wake of falling demand for commodity assets, we assume a further fall in commodity and commodity exchange rates. We believe that the decision of OPEC + to support prices by reducing crude oil production is unlikely to be effective due to the main negative, slowing down the global economy, which will naturally reduce the demand for commodity and commodity assets. As for the currency pairs EUR / USD and GBP / USD, they will most likely continue to consolidate while waiting for the UK to leave the EU.
Forecast of the day:
The USD / JPY currency pair is trading below 110.75. We believe that avoiding the risk will further push the pair down to the level of 109.60.
The currency pair USD / CAD is above the level of 1.3560. If she stays higher than him, there is a chance that the pair will continue to rise in the wake of the resumption of the fall in oil prices to 1.3785.
