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In the beginning of 2018 President of the United States unleashed the most massive trade war of the XXI century. Its tool – raising fees. The main task of the American President is fulfilling campaign promises of reducing the trade deficit, the amount of which at the time of elections in 2016, the year was us $335.4 billion What to expect in the market of currency speculators — let's deal.
have Not agreed with China about the increasing trade in personal meetings between the two leaders and during the state of the negotiations, the White House gradually increases duties on all imports from China to combat trade deficit. Additional measures of pressure – a ban on us firms and government agencies United States to work with Chinese tech companies ZTE and Huawei (the "black list" will be expanded) and the requirement to support the boycott of the allies: great Britain, Australia and Japan.
the Response of China
Chinese Authorities said the U.S. similar measures. However, China lags behind the amounts of fees due to the smaller volume of imports from the United States. Plus part of the duties, especially on raw materials the group of products that are deliberately understated, so as not to weaken the economy, where the process of slow growth:
the next step – the refusal to supply U.S. companies rare earth metals and selling large volumes of bonds the U.S. Federal reserve (national Bank holder of $1.1 trillion. American debt).
Donald trump confident of victory – this is not his first trade war
the American President has already won two trade war, with partners in the North American free trade area Canada, and Mexico to sign a new contract and "breaking" recently Mexico, forcing her to close borders with Central America from the invasion of migrants.
Now, Donald trump is on the path of revision of treaties with Japan and the European Union, they also felt the threat of falling under the duty for automotive industry, raw materials and some manufactured just for these areas, the products.
a Trade war will inevitably end in economic crisis
the majority of experts believe that the causes of trade wars – the implementation of the election promises of President trump and the alignment of the trade balance with all countries. "America above all" — the famous slogan justifying protectionism.
However, in the confrontation with China and several other countries directly suffering American business, not only from the responses of the opponents, a large number of productions of U.S. companies located abroad.
Trade war with China is completed, this is indicated by the reluctance of the White House in may to sign the contract and the failure of all future attempts of China to continue negotiations. Donald Trump needs to provoke an economic crisis, to defeat him. This is the key to its successful nomination for a second term and the opportunity to enter into history along with Franklin Roosevelt, the winning of the "Great Depression".
Before the election is a year, so Donald trump is ready to "go further", promised in July to impose additional duties of another $300 billion of imports from China.
projections of the impacts of the trade war the United States and China
the Chinese economic Slowdown will affect every state of the world, financial instrument, raw materials and consumption of agricultural products. The Chinese authorities have nothing to oppose us protectionism: any response is playing into the hands of the order of Donald trump, and only further worsen the situation.
the Forecasts of international financial institutions – world Bank, IMF, OECD, United in the assessment of the impact of a trade war. They believe that the current growth in 2019 will be replaced by a slowdown and subsequent stagnation of budget revenues in developed and developing countries. Statistics predicts drop in global GDP 1.5%, volume of international trade 6-8%.
On this background, Central Banks are forced to return to lower interest rates and renewal of various programs to stimulate neteconomy. In 2019 the interest rate cut Reserve Bank of India, Australia, can be followed by Canada and the Federal reserve.
the Easing of monetary policy will lead to the weakening of national currencies to the level of the lows of the beginning of 2000-x years, repeating the trend of the Forex market 2008-2016 years.
In particular, the quotes of EURUSD will come as a maximum of "Eurodollar parity" or falls to "start" historical values of 0.9.
the Quotations of "black gold" can reach the bottom $30.
the Slowing Chinese economy will negatively affect oil producers, is the main global consumer of raw materials will reduce purchases of oil. The reduction in OPEC production will not be able to compensate for falling supplies, and some of the cartel members will not be able to follow the restrictions because of the budget crisis, triggered by a fall in state revenue from the commodity economy.
This, in turn, will lead to growth of interest on the bonds. The probability of default of gobongo heats up the demand for Treasury loans to developed countries.
the Demand for gold will collapse along with the cost of metal because of rising interest on government and corporate bonds and the drain of gold reserves by Central Banks financing of the budget deficit.
Another blow to the quotations of precious metal will be a sharp drop in demand for silver, 25% of purchases which provide the high-tech industry. This is another battlefield in the trade war the US and China.
the Winners in a trade war – currency speculators
the Economic crisis resulting trade war will lead to the formation of stable medium-term trends. It will earn, "trading in the same direction" for a simple strategy that uses moving average even if you find the right, long periods, use "positive martingale" and the strategy of reinvestment and the "pyramid".
But do not forget that the global economic crisis fleeting because of the combined efforts of Central Banks and financial authorities taken to bringing the world economy out of recession.
regards, Pavel Vlasov
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