Currencies In Review: What We Saw In 2019 And What Might Be Ahead

Rest of world in 2019

Elsewhere, the USD remained relatively consistent, with the US Dollar Index (DXY) up over 1.05% from January 6, 2019, to 2020 – a good sentiment for the USD on a global scale. However, that doesn’t mean there aren’t dangers in the waters ahead…. It is still unclear how the continually growing conflict in the Persian Gulf will affect global trade, especially in regard to oil and subsequent virgin plastic production. The US-China trade war is far from settled, so expect that to have an impact on the 2020 and beyond forex landscape.

USD: Will it remain king?

This year is shaping up to have major impacts on the global economy, but whether that will lead to the USD being dethroned is yet to be determined. Even in the US alone, there are too many factors to accurately predict what will happen. President Trump was impeached, but will almost certainly be running for reelection in 2020. While it’s been suggested that economic indicators are stronger in the period prior to a presidential election and less robust period following those periods, it remains to be seen if that will be the case for this election.

The GBP is capable of making a huge impact, but much depends on whether a Brexit trade agreement can be reached by the end of 2020. Longer-term the value of the GBP will come down to economic growth in the United Kingdom and the Bank of England monetary policy decisions.

Another contender is the yuan, but China’s economy was starting to slow down even before the coronavirus outbreaks. As it stands, Wuhan is a major hub of transport and industry for central China, and the travel restrictions put in place are expected to have serious financial implications on the economy both inside and outside of the city. The Economist Intelligence Unit estimates the virus could shave off between 0.5 to 1 percentage point off China’s GDP this year.

So will the USD be dethroned in 2020? Unlikely. The good news is you still have time to take advantage of its current power in a variety of ways.

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