The US has joined the rest of the world in  recession

The US has joined the rest of the world in recession

The US economy has been hit hard by the coronavirus outbreak. The country has now recorded more than 123,000 coronavirus cases, the most of any country in the world. President Donald Trump, who had talked about reopening the economy for Easter, on Sunday extended the national social distancing guidelines to April 30. The impact of such a rapid spread is enormous – 3.28 million people  filed for unemployment insurance.

US Economic forecast from credible banks from all over the world

  • Goldman Sachs is one of the largest investment banking enterprises in the world, and is a primary dealer in the United States Treasury security market. The firm expects the GDP will plummet by 24% in the second quarter of 2020.
  • Economists from Deutsche Bank even compare the foreseen recession with the records of World War II and forecast the US economy to contract by 12.9%.
  • Analysts from JPMorgan, one of the largest banking institutions in the United States, have more positive expectations than others. They believe that US GDP will decline by 2% in the first quarter and by only 3% in the second.
  • Economists from Bank of America are confident that the US economy has already fallen into recession. They predict US GDP to fall by 12% in the second quarter.
  • Morgan Stanley is an American multinational investment bank. Its analysts see the present US recession as more severe than it was in 2001 but less than in 2008.
  • Economists of UBS, a Swiss multinational investment bank, expect US growth to drop by almost 10% in the second quarter of 2020.

What does it mean for traders?

There are no improvements in controlling coronavirus yet in the USA, that means macro uncertainty will prevail. Over the past two weeks the dollar has posted its biggest weekly rise since the 2008 financial crisis and then its biggest weekly drop since 2009. Yet as signs of funding stress have eased, but not abated, the dollar remains at elevated levels.


USD Holds the Line
USD Holds the Line

The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now. 

US Dollar Prepares for the Pump
US Dollar Prepares for the Pump

On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies. 

Latest news

Increased Volatility is Coming
Increased Volatility is Coming

The Reserve Bank of Australia (RBA) will make a statement and release a Cash Rate on February 7, 05:30 GMT+2. It's among the primary tools the RBA uses to communicate with investors about monetary policy.

Market Crash Incoming?
Market Crash Incoming?

This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.

What Currency Will Overperform?
What Currency Will Overperform?

S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.

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