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“Bulls” go wild during trading conflict

“Bulls” go wild during trading conflict

Erik Holm - Head of media

The fire of protectionism of Donald Trump spread to the American economy.

If in 2018 the slogan “everything that is good for America is death for everyone else” pushed the USD index upwards, then I 2019 it became clear that the USA is a non-isolated state and Donald Trump’s protectionist policy is a double-edged sword.

Deprived of support from the fiscal stimulus and the monetary restriction of the Fed, the dollar behaves quite differently than last year. The fall of stock indices and the yield of bounds, which is a typical anti-risk environment, leads to its weakening. But in 2018 it was said that trade wars allowed Greenback to intercept the status of the main asset-seeker from the yen and gold.

When investors fear about recession and easing of monetary policy are confirmed in the words of FOMC officials, EUR/USD “bears” find it hard to resist the attack of opponents. President of the Federal Reserve Bank of St. Louis James Bullard believes that the reduction in the federal funds rate may be justified in the near future. Firstly, the slowdown in GDP due to the US-China trade conflict is moving faster than the Fed expected.

Secondly, inflation and its expectations are below the goal. Thirdly, the dynamics of the yield curve suggests that the current adjustment of monetary policy is inadequately high.

Indeed, the inverse of the differential rates on US 10-years and 3-month debt obligations accurately predicted a recession in the past. At the same time, the peak of the yield of US-bound to multi-month lows and a reduction in the spread with Germany counterparts indicate an undervaluation of the euro compared to the US dollar.

According to the market statistics, there is a strong trend in the pairs with USD as a second currency. And the move of the market is faster than usual because of the factors mentioned before. Apparently, it gives automated trading systems a wide field to make a profit and so the ForexStore market is the best place to find the best forex robots to get max profit out from the move of the market.