What May Forex Investors Expect in 2020?

A look-back on 2019

As global financial hubs, Europe, US, China and Japan have a large group of residents keen on investment and a wide client base of forex brokerage, thus being attractive to numerous forex brokers who flocked to expand their business in these areas. But looking back on 2019, the global forex market has seen many challenges such as Brexit movement, Hong Kong unrest and the trade conflicts between China and US, as well as Japan and Korea.

Many forex companies didnt survive the series of shocks and went down, leaving investors at heavy losses. This market with a daily trade volume of 6.6 trillion USD offers as much risks to investors as profits, which means investors need to reconsider their strategies in face of these challenges.

Source: Bank for International Settlements

Outlook for 2020

The upcoming 2020 will again test the forex market and investors as well. As Frank Holmes, the CEO of US Global Investors mentioned when he commented on the prospect of investors, “Saving and investing monthly matter, they should be spontaneous and regular like brushing your teeth. Similarly, you should accumulate your wealth steadily and progressively.” In short, investors need to keep a steady pace in 2020, while closely following the big news and major economic indicators and avoid making impulsive and speculative decisions.

Looking ahead, the forex market is still full of untapped potential. The major currencies will depend on bearish factors to gain more momentum, and investors should be more optimistic in seeking a promising currency pair to invest in.

US dollar:

2020 can be even more challenging for the US economy, as there will be more negative factors driving a downcast compared with 2019. And with growing political uncertainty in the country that arises from the upcoming election, the economy faces more pressure, which casts a gloomy outlook over the US dollar.

Euro:

Generally, investors tend to favor underpriced currencies when the price is stagnant on the forex market. According to the Goldman Sachs prediction model, euro is 15% undervalued and thus makes an ideal choice for investors.

Source: Bloomberg, Goldman Sachs Global Investment Research

British pound:

The pound soared last week after Conservative Party won the snap election with an overwhelming majority. Market observers sounded upbeat as they believe UKs economy will rebound at the beginning of 2020 after being sluggish for several months, propping up the pound as a result.

Japanese yen:

The low interest rate and high liquidity of yen have made it a perfect safe haven asset, in times of greater risks, the yens exchange rate may grow instead. But due to a soft global economy, fierce competition of the Asian market and limited room to further ease monetary policy, Japan may face greater risk of economic downdraft than the US.

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