Let’s talk about the direction in which financial markets, including Forex, can go in 2019. What direction will greenback choose? What will happen to the UK after Brexit? Where will the oil go? And not only these questions bother many traders. We will contact the analytical Department of IQ Option to get comprehensive answers. Let’s start with a description of one of the main engines of the global financial market – the US dollar, which dynamics with probability in 100% will affect all foreign exchange assets.
You can read also about cryptocurrency in 2019.
What changes in the Forex market will we wait for in 2019?
The American economy is growing and this is a well-known fact. But everyone also knows that its growth lasts more than a year and it comes to its maximum values, after which the correction begins. In addition, it should be remembered that the global economic system shows signs of weakening, which may begin with a slowdown in the us currency. In response to this, federal reserve has already suspended the growth of the main interest rate, which increases the chances of a negative scenario for the US dollar.
The next aspect is the normalization of the ECB monetary policy, namely the curtailment of the QE program and the increase in the interest rate (the European Central Bank follows in the Fed’s footsteps). If the Central Bank of Europe takes such a step, it will also have a negative impact on the dollar, especially in the pair with the Euro. In short, the US currency will most likely fall rather than grow.
What assets to trade in 2019?
Now, when we have dealt with the main driver of movement in various markets, let’s look at the assets that would be interesting for investment in 2019. The precious metal has not been in great demand among investors in recent years.
Last year, its value fell from $1,300 to $ 1,200. However, according to experts of IQOption (website), taking into account the volatility of stock markets and inflation risks, investors can start looking for protection in gold and this year the precious metal will probably be able to regain the role of a low-risk asset. This year, the stock market is the most attractive for investors. However, even fans of investing in stock market indices should exercise caution (stock market trading training). Despite the fact that the us stock market after a decade of constant growth is now showing very high volatility (hundreds of points on the S&P 500 index) and has adjusted from the historical maximum values of almost 10%, it is too early to leave it without attention.
What main events await us in 2019?
So, what can we expect in 2019? It is obvious that the global economy is showing a decline in growth. Most likely, this will be reflected in a smooth decline in the main forecasts. According to IMF and OECD forecasts for 2019, global GDP growth should reach 3.5%.But probably the highest point of the world economy was only in 2018. Analysts expect that the downside risks in the global economy will increase this year. The situation of the Japanese economy and the EU economy will also remain unfavourable. Alas, these countries failed to evade the policy of negative rates. As for the US economy it is worth noting that the program of economic stimulation has reached its peak and will soon begin to gradually subside.
A trend in the automotive industry and housing market is already moving into a recession. We should note that these sectors are most susceptible to interest rates. If GDP shows a positive trend by June this year, it will be the longest period of growth of the US economy. But, obviously, the highest point of growth is behind us, and by the end of the first half of the year the risks of recession will grow significantly. This year, the US regulator will not be able to further tighten monetary policy, as the cycle of interest rate growth in the United States has almost reached the point of reversal. If there is a large-scale decline in the market of shares and / or securities, the Fed will have to introduce incentives. We will not be surprised if the fed returns to the QE program, which will become the fourth.
How can this affect the us currency?
If interest rates and economic growth in the United States really approach the maximum, this will also apply to greenback. In this scenario, the EUR/USD rate may reach 1.20 and even 1.30. The dollar is opposed by divergence in the trends of monetary policy and economic growth and the strife in the US government in the run-up to the presidential elections scheduled for the year 2020, carry a great risk for the investment of all assets that are somehow connected with the dollar.
Naturally, it can be noted that the Eurozone is also subject to political risks. Given the developments in some Eurozone countries (the UK and Italy), there are doubts about the long-term sustainability of the EU. Regarding Britain, experts expect “pure Brexit” without serious negative impact on economic indicators. On the contrary, the British economy closed 2018 on the rise: the average wage growth has accelerated to the ten-year maximum, the employment level is the highest, retail trade shows stable growth, and forecasts for industrial production are optimistic. This year, sterling has every chance to grow stronger than expected.
What to pay attention to?
IQoptions experts believe that in the first half of 2019, emerging markets will show better dynamics than in the second half. This can be explained by seasonal factors and structural risks. In General, the risks are associated with increased volatility and a decrease in macroeconomic indicators (unlike last year, when the main risk came from the growth of interest rates). At the same time, there is a possibility that in 2020 the global recession may be higher than 50%. Most likely, the issue of trade confrontations and geopolitical tensions this year will not be as relevant as in the past, for this reason, the most preferred strategy of “point selection”.
How to choose a Forex broker?
Let’s consider criteria that Forex broker should choose. Remember that the broker is your representative on the stock exchange. It is through him you will perform all operations, and therefore it is important to pay attention to the following points.
- 1. Reliability. One of the distinguishing features is a good reputation. It is necessary to study the reviews of other traders who have already worked or who are working with a particular company.
- 2. Check out the broker’s commissions.
- 3. Make sure that the spread and swap sizes are profitable for you. In reliable brokerage companies, as a rule, you can choose the type of spread: fixed or floating.
- 4. The size of leverage. Despite the fact that a large leverage implies large risks, however, if the starting capital is small, then with the help of a large leverage it will be possible to increase your initial Deposit. Almost all dealing centers offer leverage of 1 to 500 and this is a good value.
- 5. Small re-quotes, no slippage and short terms of operations. The speed of transactions is of particular importance, so many brokerage companies are making every effort to reduce this value to a minimum. The broker IQOption, for example, has the value from 0.03 seconds.
- 6. The quality of communication with the server. A good connection is important. It is better to abandon such a broker.