Alexander Douedari & Frank Walbaum
What are the most probable market scenarios for 2019 and how can they affect your trades? Get ready for this year’s most anticipated events.Now Available to Download for FREE!
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“US economy is expected to grow 2.6% in 2019”
Global Markets Remain Largely Bullish
We see a choppier year ahead for global markets, oil will remain a wild card and investors will maintain a largely defensive stance when it comes to stocks as they continue to worry about a possible recession in 2020. The median forecast indicates the US economy will grow 2.6 percent in 2019 which might be good news for major US retail shares. In Europe however, the macroeconomic picture will be very different, shares are expected to move in a tight range going into the year-end and throughout 2019, as slowing growth, political risks and worries over Washington’s protectionist policies keep investors on the sidelines.
A Decisive Year For Bitcoin and Other Major Cryptos
In 2018 we’ve seen some very painfully steep price drops in the crypto sphere. In fact, bitcoin price forecasts of as high as $100,000 were a far cry from bitcoin’s closing price for 2018 at around $4100. We should point out however that BTC matured as an investment vehicle, with the most obvious confirmation of this being the introduction of Bitcoin futures to the global markets. We believe that the 2018 crypto sell-off achieved a major crypto cleanup and therefore changed the dynamics in the crypto market. In 2019, institutional investors will likely re-evaluate Bitcoin, as major platforms such as the Bakkt and Nasdaq are already offering cryptocurrency investing to institutions. All in all we believe increasing derivatives in Bitcoin’s market will bring more buying interest back into the market and help BTC pairs recover.
“Bitcoin derivatives will bring more buying interest and help BTC pairs recover.”
“China will have a hard time recovering from a full blown trade war”
The China/US Front
For much of this year the raging trade war between China and the US has caused the dollar to rally against its rivals as the US continued to impose hefty tariffs on China imported goods. The current trade truce has done nothing to alleviate stress in China’s A-shares market. Looking at China’s current declining numbers on fixed asset investments, a retreating industrial production and a slowing growth in the property market growth, China will be paying the heaviest toll in an extreme 2019 trade war scenario. Halfhearted stimulus attempts won’t work. China will simply need to take time to deleverage and rebalance.
Brexit Takes Center Stage
If there’s one thing everyone agrees on when it comes to 2019, is that navigating Brexit uncertainty will remain the U.K.’s biggest challenge. The recent failed no-confidence vote in Theresa May seems to have reduced the risk of a no-deal, but the most likely final scenario still remains something close to the current deal, especially after a threatened or actual second referendum. How the UK fares beyond March 29 is the big question, and it all boils down to how fast and effectively the Bank of England will react to any Brexit outcome. The worst case Brexit scenario is that Britain crashes out of the EU with no deal and with insufficient preparation. In such a case, BoE will have little choice but to react. It could chose to hike rates sharply to shore up the pound and hold inflation down, but we could also see the complete opposite scenario. The BoE could choose to cut rates as it did after the brexit vote in 2016, this would in turn cause the GBP to tumble against its rivals.
“We could be seeing the EURGBP pair moving lower towards the mid 0.85 region or the GBPUSD back below the 1.20 region”
“France will struggle to finance itself in 2019”
EU Members Struggle With More Budget Deficits
The Italian Fiasco sent shockwaves to the bond market in 2018, while the German-Italian spread exploded not too long ago. On Dec 20, 2018 however, Italy’s populist leaders bowed to the demands of the E.U. and reached an all important budget deal with the European Commission, sending the EURUSD more than 1 percent higher on the day. Looking into 2019, it is important to keep in mind that Italy is not the only EU member faced with budget deficit challenges. France will struggle to finance itself after President Emmanuel Macron gave in to anti-government street protests by yellow vest citizens struggling to make ends meet, while in Poland a defiant nationalist government may soon have to face a series of serious EU lawsuits.
ALEX DOUEDARI / MARKET ANALYST
A seasoned trader with decades of experience in CFD / Forex trading. He has received numerous awards over the years like the Barclay Hedge and Investors Choice Award!
FRANK WALBAUM / MARKET ANALYST
Frank has worked for Germany’s biggest broadcasting station before he chose to move to Asia where he singlehandedly managed a €450 million Forex fund. Frank is now a full-time currency trader and manages his own FX portfolio.