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Friday's sales on the US and European stock markets have spread to Asia early in the new trading week, as worries about the health of the global economy heat up at a brisk pace.
What is perhaps even more worrying for investors is that the US Treasury yield curve has reversed for the first time since 2007. This evolution will psychologically encourage additional anxiety and the fear of the rocket to do so. fear the global economy a further slowdown, if recent the globe has not yet provided any indication of the arrival of the economic downturn.
The sharp declines in global markets and the reversal of the US Treasury yield curve follow the spectacular fallout from the Federal Reserve's decision after the conclusion of the last monetary policy meeting last Wednesday, where suspicions are now waves. Developed countries may need to lower their interest rates as early as 2020. This disappointing outlook represents a dramatic shift in market expectations globally and is badociated with the coordinated chorus of multiple respected institutions, senior government officials and global central bankers who have repeatedly stressed global growth prospects are deteriorating.
Keep an eye on yen movements
The Japanese yen has managed to move closer to the US dollar since world markets began to fall, but the yen demand has not yet reached its peak when we consider that the Japanese Nikkei 225 is down more than 3% at the time of writing.
I will be watching closely how investors will equate the reversal of the US Treasury yield curve at the start of negotiations for the new week, as market panic has always attracted yen buying in the past and a Negative market will make possible the addition of more, the yen throws into a portfolio of investors an interesting conversation.
The dollar king remains on the throne
The only reason gold prices have not jumped due to market uncertainty is due to the steady valuation of the US dollar. Previous economic recessions have encouraged continued demand for the greenback, and there is a balanced idea that the dollar will be able to outperform if the economic press releases released this week reinforce the view that global economic momentum is slowing faster than planned. .
The US dollar justifies its current valuation as the US economy remains in a significantly higher position than its peers in the developed world. The revised Fed forecast for growth of 2.1% this year and 1.9% by 2020 is a positive element in terms of what the EU can offer to the global economy.
The recent series of serious economic announcements from the euro area shows that the EU economy will be lucky if it even manages to reach 1% growth this year.
If you combine the dynamic between global economic growth projections and the fact that the weight of the euro represents a significant part of the dollar index, the greenback is expected to enter the second quarter of 2019 with the desired support.
Brexit Saga enters the Make-Or-Break stage
The DXY index could also benefit from the expected volatility of the British pound this week, as UK lawmakers are about to vote on Theresa May's Brexit deal for the third time. It is difficult to understand how exactly the British Parliament will approve an agreement that it has soundly rejected twice before. Speculation that some would be willing to support the deal if British Prime Minister Theresa May agrees to withdraw adds another badtail of unpredictable risks to the future of the pound sterling.
Brussels has only allowed the United Kingdom to receive a short extension of the request for the postponement of the EU's departure date of 29 March and it should be verified whether this short extension will be sufficient to convince voters in Westminster. .
If the May Brexit deal gets the green light, it should send the GBPUSD above the 1.33 threshold as the market believes more and more that the UK will be able to leave the Union. European Union with an agreement in hand.
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