In the markets, there are growing expectations that global central banks will have to part with their "dreams" of striving for the normalization of monetary policy. The hope that the world economy has completely overcome the problems caused by the full-scale crisis of 2008–09 has not been fully resolved.
The world economy managed to recover only thanks to the injection of huge amounts of money in support of the real sector of the economy, as well as into financial markets. As subsequent events showed, this restoration could exist only thanks to the most powerful economic injections and nothing more. The United States benefited the most from this, although some countries and regions also got some pieces from the financial pie.
And after exactly ten years after the beginning of the crisis and the end of the stimulus measures in the USA and the beginning of tightening of monetary policy, it became clear that not only the American economy but also the world as a whole can no longer exist without financial support. What happened was warned by leading economists and experts, the emergence of a direct dependence of economic growth on financial injections, the removal of which will lead to a new financial crisis.Markets are still hoping that ending the trade wars, and especially between the States and China, will bring the world economy back on the road to growth. But we have doubts about this. We believe that trade wars revealed an objective problem indicating that in the current state the world economy cannot grow autonomously without financial injections, which only indicates that when the ability of these measures to support it weakens, a new world crisis will begin with even more monstrous negative consequences.
Evaluating the prospects for such a scenario, we believe that the demand for risky assets will continue to weaken. In the foreign exchange market, high volatility will create the illusion of the recovery of market players' interest in high-yielding currencies and a decrease in the potential of the dollar as a refuge currency, but eventually, in the case of the development of our forecast, interest in the dollar will gradually grow.
Forecast of the day:
The currency pair EUR / USD is trading below the level of 1.1335. If it does not rise above it and, on the contrary, drops below 1.1290, we should expect its fall to continue to 1.1215.
The currency pair AUD / USD remains under pressure while awaiting trade negotiations between Beijing and Washington. It can be assumed that it will continue to decline by the end of the month if it overcomes the mark of 0.7075. In this case, it may fall to 0.7030.
