It’s time to get grinding in 2019, but before we get back into full swing it’s time for one last bit of fun as we throw out some FX ideas and wacky predictions for the new year. Check it!
Safe Havens Rally Up!
There’s a complicated plethora of financial market drivers out there, so it’s tough as always to make a call for the entire year, especially a quick one.
And this year may be the toughest one yet to predict as we led into it with a tightening bias from major central banks against weakening leading economic indicators, as well as weakening coincident indicators from around the globe. Let’s also not forget to add a potentially growth crushing U.S.-China trade war, a possible No-Deal Brexit outcome, and U.S. political issue scenarios to the mix in case traders weren’t anxious enough about what’s going on with macro economic drivers.
So it looks like market players have global growth slowdown in mind for 2019 as equity markets drop, bond yields fall, and safe haven currencies are taking the lead to start the New Year. And these conditions are likely to hold in the near term, which makes a bull case for safe haven currencies–particularly the Japanese yen–the ones to watch in early 2019 as they could continue their strength over the high-yielders from 2018 for the next few months.
After that, it makes sense to see how the data and geopolitical landscape shapes before we move on to answering the question on whether or not world governments and central banks would flip back into stimulus mode, potentially changing market sentiment once again and how we should position ourselves.
More Aussie Weakness?
As we can see in the chart above, 2018 was not a good one for Aussie bulls. Plagued by low inflation growth and now slowing economic growth, the Australian dollar fell out of favor with currency traders throughout the year, especially as one of its biggest trading partners, China, started showing signs of weakness and continues to do so in the new year. And don’t forget that the Aussie doesn’t do well in global risk-off environment like we’ve seen in the past month that saw equities, commodities and high-yielding currencies fall.
Couple this with a weakening housing market that’s scary enough to keep the Reserve Bank of Australia up at night, it’s not likely we’ll see any kind of policy tightening from the RBA for quite some time and sentiment is likely to remain bearish on the Aussie dollar versus the majors in 2019.
The counter to this idea would be if we did see a spectacularly positive end to the U.S.-China trade war situation, or maybe even more stimulus initiatives from the RBA or the Chinese government to fight off slow growth conditions. But these are low probability scenarios for now, so the trend may remain a friend to Aussie bears and the downside momentum in AUD may still have some room to run. Could AUD/JPY short be the trade of the year we should all explore?
Next for Crypto?
It was an extremely busy year for the fledgling asset class, not only on the price action side where we saw massive drawdowns in the value of crytpocurrencies, but also on the industry side as well ranging from changes in global regulation, to a slew of security issues and institutional developments.
Anything can really happen in what is definitely the Wild West of financial markets, so the only “wacky” possible prediction would be that nothing happens in cryptoland. But the next closest far reaching idea that could be on our radars is another flippening. Ethereum becomes king in crypto coin world? Ripple over Bitcoin perhaps? If so, that should solidify Ashton Kutcher as the next Warren Buffett, right?!
In any case, Bitcoin has fallen around 80% from its highs…the time to buy is “when there’s blood in the streets” as the saying goes. So, another low probability but high reward-to-risk idea to explore is Bitcoin at these levels just below $4,000.00. Any willing takers?
That’s it for the markets…for now. Let’s take a look the other FX-Men wacky predictions that made the cut this year:
More viral challenges. Because the Tide Pod and “In My Feelings” challenges are so last year. Big Pippin thinks he can win the “K-Pop-dancing-while-on-an-airplane” challenge if that ever becomes a thing. Please, please, please become a thing!
Game of Thrones’ final season will take over the world. Who needs to know what happens to Thanos and Iron Man in Avengers: Endgame when we can talk about what Danny, Jon Snow, Cersei, and Night King are doing instead? Our prediction is that the Night King wrecks house, takes Cersei as his bride, who later cuts him down with Dragonglass in his sleep. Yup, you read it here first.
Celebrity shocker! Pete Davidson becomes Taylor Swift’s latest fling, sparking a monumentally catty public war between Swift and Davidson’s superstar ex-fiance, Ariana Grande. “How to be like Pete Davidson” rockets to become the most searched internet phrase for 2019.
Macron will be ousted by a social media influencer, and voting and policy-making will be conducted via Instagram story polls. Germany’s CDU will think it’s a good idea and use it to select Merkel’s successor, which ends up being David Hasselhoff winning the polls to lead Germany into a revolutionary future with KITT as his Vice Chancellor.
Hack Attack! The meteoric rise of the world’s most popular video game, Fortnite, comes to a screeching halt in 2019 after hackers take the game’s servers down. Coincidentally, global productivity rises and frustrated wives/girlfriends are once again able to talk to their men.
Jerome Powell will resign as Fed Governor. He will be replaced by Ivanka Trump who will solidify the prevention of rate hikes and reverse quantitative tightening in 2019. Given the changes in administration personnel we’ve seen in 2018 and Trump’s unorthodox leadership style and methods, is this really a “wacky” prediction?
There ya have it, folks! These are some of our wacky, and completely ridiculous predictions for 2019, but we’re curious to find out what yours are.
What are your crazy and wacky predictions (both forex and non-forex) for 2019?