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US Dollar, Yen May Rise if IMF, World Bank Outlooks Spook Markets

US Dollar, Yen May Rise if IMF, World Bank Outlooks Spook Markets

2019-10-15 02:00:00
Dimitri Zabelin, Junior Currency Analyst
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World Bank, IMF Growth Outlook, US Dollar, Japanese Yen –TALKING POINTS

  • US Dollar, Japanese Yen may gain if IMF, World Bank growth outlooks spook markets
  • Global slowdown fears may accelerate as cross-border trade wars continue to spread
  • Fears of a recession may get amplified if risks in leveraged loans, debt markets swell

Learn how to use political-risk analysis in your trading strategy!

The US Dollar and Japanese Yen may rise if global growth forecasts from the IMF and World Bank undermine market sentiment and place a premium on anti-risk assets. Last week, the newly-appointed IMF Director Kristalina Georgieva warned of a “synchronized” global slowdown amid strained international trade tensions. The manufacturing sector has been hit particularly hard and is now slowly seeping into services PMI reports.

Chart showing US Manufacturing PMI

Investors will be watching the release of the IMF’s World Economic Outlook with scrutiny as economic conflicts between OECD countries are spilling over and creating inter-emerging market trade wars. The rise of economic trade tiffs around the world threatens to disrupt what are already strained cross-border supply chains that are also also being afflicted by geopolitical risks spanning across continents.

US Dollar, Yen May Rise if IMF, World Bank Outlooks Spook Markets

Other notable guests will include co-chairman of Bridgewater Associates Ray Dalio and Goldman Sachs CEO David Solomon. Investors and policymakers alike will be keen on tuning into their commentary in light of increased anxiety about stability in financial markets. A major point of concern that is becoming more frequently discussed is the growing market for leveraged corporate debt and the proliferation of CLOs.

US Dollar, Yen May Rise if IMF, World Bank Outlooks Spook Markets

If commentary from these officials and international institutions reinforce recession and global slowdown fears, markets may put a premium on haven-linked currencies like the US Dollar and Japanese Yen. Meanwhile, a discount may then be placed on risk-oriented assets like commodity-linked FX and equity markets. To get more in-depth fundamental analysis, be sure to follow me on Twitter @ZabelinDimitri.

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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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

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