Global factors influencing Forex Trade 

Last year was tough for investors as the global growth outlook declined and the rate hike expectations remain faded. There were predictions of dollar downtrends as there are many issues in the US market, which was further burdened by the increase in interest rate differentials. 

The US and the investors want safe reserve currency and the Fed rate hike decline comes at the time when most of the other banks are preparing to initiate a tightening cycle, and if the economy remains restraint, with higher tariffs, trade issues and narrowing trade with China, the dollar could gradually weaken. 

In the year, the markets started with a strong uptrend but the Euro gains were restricted by the Brexit risks and Italian worries. As the Italian crisis is expected to subside, the Euro worries may reduce. 

Euro continues to rise steadily and it reached $1.1312 in the EUR/ USD ratio in April midweek.  The pound remained at $1.3080 as per GBP / USD as it was supported by the apparent low risk, even in the condition of a no-deal Brexit. 

The Australian dollar remained at $0.7176 / USD pair. On April 15, Yen reached a low, and the Swiss Franc remained the weakest, while, the currency market volatility was eased by growing optimism in the global markets. 

Global Factors 

Globally, the five largest economies - the UK, Spain, Italy, Germany, and France are under pressure, and there is a need for regional policy formulation, implementation, and coordination, where the European authorities need to play a significant role to balance the trade. 

Early steps are needed to counter the risk factors associated with vulnerable economies like Italy where the continuation of recessionary conditions ignites worries of long-term debt sustainability. 

There are many additional factors influencing forex markets, where inflation in the Eurozone and Japan continues to pose danger, as such conditions will further reduce the scope of a rate increase. 

These countries are vulnerable where a possible slowdown in China may hurt the global situation, even in such conditions, sustained US treasury yields are supportive, and without the rebound in growth, the condition of currency markets may endure in the current year.

China made use of technology to identify the demand and supply transformation and expanded in the foreign markets to contribute towards the global value-added chain. 

With the help of an impressive trade policy, the country continues to grow to be the world’s second-largest, although, the last year was disturbing to growth with the decline in export markets, especially, in Europe. 

The US imposed tariffs and threatened to introduce various other barriers, which increased concerns, mostly due to the lack of transparency in trade terms and conditions, however, the restrictions were widely supported by the local government with the implementation of aggressive stimulus policies and various other expansionary monetary measures.  

China’s imports were low but the data recently released show the economy is bottoming out, and its exports rebounded sharply as new bank loans increased in March.