Whoever said anything about Donald Trump's tweets, but the White House owner still managed to bring the markets out of balance. High volatility was observed in the USD/JPY pair. In a short time, quotes managed to go back and forth. Demand for the defensive yen is increasing on Tuesday, as it is difficult for investors and traders to believe in the words of the US president, who announced that there was a call from China. Beijing aggressively calls him to the negotiating table. In addition, the facts indicate the opposite. A spokesman for the Chinese Foreign Ministry said he did not know what Trump was talking about. If the fact of the call is not confirmed and China does not make concessions (which is unlikely), one should not hope for a recovery of USD/JPY.
Bank of America Merrill Lynch calls attempts to raise the dollar in conjunction with the yen an opportunity to sell. According to the forecasts of currency strategists, the pair will stay in the region of 105 until the end of the current quarter, and by the end of the year it will fall to the level of 101.
American statistics now look good, but do not flatter yourself about its invulnerability and impenetrable immunity. The global trends, from which the negative blows, will do their job. Banking analysts estimate the chance of a recession in the United States before the end of this year 1 to 3. At the same time, the BAML analytical model signals that the likelihood of such a scenario has increased to 20%.
The recession in the global economy is becoming increasingly apparent. New statistical data is expected to continue to support fears about the consequences of a trade war, the end and edge of which is not visible. It is worth noting that Trump regularly plays with the emotions of market participants and with China, included. The analyst community believes that Beijing is ready to tolerate and wait for the US presidential election in 2020 in the hope that Trump will not win.
Decrease in the USD/JPY quotes should ensure the Fed rate cut and preservation of soft rhetoric. An additional driver promises to be the stock market. In the second half of the year, the peak on it will finally form, and control will pass to the "bears". According to banking analysts, in the context of a trade war and a global recession, easing the Fed's policy is unlikely to ensure a steady increase in risk appetite.
The material has been provided by InstaForex Company - www.instaforex.com