Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Top Trade Idea 2020: Global Recession? Take the Under: Long Crude Oil, Long CAD/JPY

Top Trade Idea 2020: Global Recession? Take the Under: Long Crude Oil, Long CAD/JPY

Christopher Vecchio, CFA, Senior Strategist

One of the most popular calls in the second half of 2019 was that the global economy, led by the US, was moving towards a recession. The culprit? None other than the US-China trade war. And for some time, there may have been good reason: one of the most reliable recession indicators, the US Treasury yield curve inversion, was flashing red.

Yet as the calendar turns to 2020, all those recession calls seem overblown. The US economy looks like it will close 2019 with an annualized growth rate around 2%. Global PMIs started to rebound by the end of the year, as did industrial production and manufacturing data from G10 economies. Major central banks are loosening or shifting to neutral thanks to tight labor markets, yet tame inflation will keep back any significant efforts to restrict monetary policy (see: Fed Chair Jerome Powell’s December 2019 press conference).

For 2019, at least the first few months, it seems that the ‘reflation’ trade may be back on: that is, ‘long growth.’ Crude oil is the commodity market proxy for growth, while CAD/JPY rates serve as an FX proxy to crude oil.

Crude Oil Price Technical Analysis: Daily Chart (October 2018 to December 2019) (Chart 1)

Crude Oil Price Chart

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES