Talking points on this podcast:
- Where is EUR/USD headed in the new year?
- Is gold set to move in line with safe-haven currencies or will it deviate?
- Are stocks due for a correction?
This time on Trading Global Markets Decoded, our host Martin Essex is joined by DailyFX analysts James Stanley and Peter Hanks. As the decade comes to a close, we explore the outlook for EUR/USD heading into the new year, debate how gold is set to move in 2019, and reflect on whether stocks are due a correction in the coming months.
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Forex Forecast: EUR/USD outlook
Martin begins the podcast with discussion on the outlook for EUR/USD. With the US-China trade dispute, the future of Donald Trump’s presidency, and the interest rate outlook in the US and the Eurozone, there is much to discuss about the currency pair’s future in 2019. Against that backdrop, where does James see EUR/USD heading in the New Year?
“I think there’s another factor and that’s [new ECB President] Christine Lagarde,” he notes. “[Former ECB President} Draghi’s tenure was defined by a really dovish overall outlay. There were no rate hikes during his entire tenure atop the ECB; he launched a bazooka of stimulus [measures] a couple of times, drove rates into negative, and there’s the question of how much lower they can go.
“I know the wide expectation is looking for a tip towards EUR/USD parity, but I think Lagarde is going to put pressure on the fiscal side of the equation, maybe backing off the monetary cannons for a little bit. I’m looking for EUR/USD to pop higher next year. I think we’ll see some Euro strength in 2020 which may surprise a lot of folks.”
Are stocks due a correction?
On stocks and the chance of a correction lower, Peter says: “This is going to come down to the looming election and President Trump’s [decisions]. Those tax cuts are probably going to be talked up if the economy starts to falter a little. The backdrop of the dovish Fed, will continue [to take] stocks higher in 2020.”
Outside of the US then – will other markets such as London and Tokyo just follow Wall Street or have separate drivers? “Barring any major breakdown, the trend will be broadly higher and follow US indices. If this stimulus that’s being pumped into every major market finally starts to take hold, that’s when you can start to see a real uptick in equities.”
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