It’s time to get back to the daily forex grind, but as usual at the turn of the new year, it’s time to throw out some FX ideas and wacky predictions for 2020. We actually had some pretty good calls in our predictions for 2019, so hopefully we have another round of good luck with this bunch. Check it!
More Positive Risk Sentiment to Come?
Expectations for 2020 market themes are likely to be a continuation of the same driving themes at the end of 2019: waning global trade tensions and an easy global monetary policy environment. This is likely to keep traders in a positive risk sentiment mindset, but of course, the global trade story could shift on a dime as there’s no telling when the Donald could wake up on the wrong side of the bed and decide to tweet a few trade jabs to provoke China once again.
There’s also the risk from the Brexit story to watch out for. While the odds of Brexit finally happening significantly rose after the Conservative Party took the majority in the December general election, don’t consider it a done deal just yet. The deadline for a final trade agreement was set for the end of 2020, a task that most think being nearly impossible, including the European Union.
Anything can happen between now and then, and if that “anything” is more arguing in Parliament, general elections, or a new Brexit deadline, who is to say that the EU’s patience on Brexit negotiations runs out and officials decide to put an end to the mess once and for all by letting a hard Brexit materialize. In that off chance, we can probably kiss the positive global risk sentiment good-bye in the short-term as economic chaos would likely ensue in the region.
Overall though, the odds are pretty high right now that world leaders keep a cool head in 2020 on trade, and monetary policy stimulus will likely continue to stay easy to spur economic growth. If this scenario plays out in 2020 and we don’t see any unexpected negative shocks to the market (geopolitical conflict, natural disasters, etc.), then it’s likely the safe haven currencies like the Japanese yen and Swiss franc will fall to the rest of the major currencies, with the Comdolls and Sterling likely being the outperformers early in 2020. We especially think the Canadian dollar is the most attractive of the bunch given Canada’s economic resilience in 2019 despite the global geopolitical and trade uncertainty, reflected in the Loonie’s out performance against all of the majors seen below:
Investors keep waiting on crypto
2109 was a quiet one for crypto currencies relative to years past, but the spotlight could be back on altcoins in 2020 as bitcoin is due for its “halvening.” Also if the geopolitical risks discussed above materialize and we see a reversal of positive risk sentiment, this could lead traders to throw in the towel on traditional markets and move some of their funds to crypto assets instead. So, the table is set for a potential run higher in 2020 for bitcoin and the gang, but look out for risks like tighter government regulation, broker failures and hacking to put pressure on the this highly speculative and volatile market if they show up.
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:
Another non-politician wins the White House in November. While the odds of Donald Trump winning the 2020 U.S. Presidential continues to remain high, we think a dark horse candidate could jump out of no where to surprise everyone. Andrew Yang could be that person, not only because his policy proposals make sense for the future, but how do most U.S. citizens not vote for the guy looking to give them a “Freedom Dividend” of $1,000 a month, free and clear?
More movie remakes of 90s classics? When it comes to Hollywood, nostalgia is really the “in” thing these days. But audiences have obviously gotten weary of Disney live action remakes, so filmmakers dig deeper into the throwback trend. Hey, if Tom Cruise can do Top Gun again, then Maculay Culkin can be back for Home Alone, right? Or who wouldn’t be fired up for to see Keanu Reeves in the Matrix again taking down the machines?
Kim Jong Un and Donald Trump bro it out at Mar-a-Largo. The two not only work out a nuclear deal, but also hash out a treaty to end the Korean War as well. There’s nothing that a round of golf and a buffet of MacDonald’s and Burger King burgers can’t fix, am I right?
Recreational marijuana becomes legal at a Federal level in the United States. Snack food companies like Nestle and Coca-Cola race to become the most valuable companies in the world as Americans find a new home for their Freedom Dividend in marijuana edibles and beverages!
There ya have it, folks! These are some of our wacky, and completely ridiculous predictions for 2020, but we’re curious to find out what yours are. Please share in the comments section below!