CIBC anticipates USD/ZAR will end 2020 at around 15.15, and 2021 at 14.95.
Global crisis. What about global stabilization?
Information is not investment advice
While some predict the global crisis, recession, and even global depression, others are not afraid to forecast the stabilization of the global economy.
Just recently, Wells Fargo published its 2020-projections depicting risks of the global crisis. Among them, we can find an inverted yield curve, geopolitical uncertainties, and monetary policy of the Federal Reserve. The trade war, Brexit, Middle East, and North Korea tensions are among the biggest external threats for the global economy. A possibility of the ineffective Fed’s monetary policy scares no only American markets but the global ones. America is the world financial center that is a barometer of global economic health. The yield-curve inversion is another doubtless factor that warns about the possible recession. The factors seem convincing, don’t they?
Any chance for stabilization?
However, not all analysts see the future in dark colors. Goldman Sachs has a contrary point of view. According to the investment bank, global economic perspectives may be not that bad.
Bank’s analysts predict the rise of the cyclically sensitive assets in both US and emerging markets. The pickup will be caused by the ease of trade disputes. Being one of the high-risk factors of the recession, the trade war is forecast to limit its impact on the markets. Despite mixed comments by the parties, the bank believes in the close calming of the war as the trade conflict has already peaked. The state of the Chinese economy is one of the leading factors in determining the global economic environment. The Goldman Sachs declares it to improve in 2020. The upward economic move is supposed to be caused by the improvement in the trade dispute, a recovery of the manufacturing activity, and the supporting domestic policy.
At the same time, we may see a small decline in the bond market and the US dollar due to the development in global growth but the great fall isn’t anticipated.
Nevertheless, the bank doesn’t exclude many risks and valuations.
What is more likely?
It seems like arguments of Wells Fargo are more persuasive than Goldman Sachs’ ones. The main argument for the stabilization is the easing of the trade dispute that is questionable with a mix of comments from both sides. Although it’s early to talk about the global crisis, it is worth considering the possibility of the recession. If the trade conflict is not resolved, Brexit is not done, and the emerging markets continue suffering, we can anticipate a continuation of the decline in global economic growth.
The progress on the COVID-19 vaccines and hopes of a swift economic rebound next year added to the optimistic sentiment in the market.
World shares paused on Monday to assess a record-breaking month
Looking ahead, highlights from macroeconomic calendar include regional and national German CPIs, US Chicago PMI, OPEC meeting, ECB's Lagarde and BoE's Tenreyro speeches.