2016 has already proven to be a turbulent year in terms of market movements and Forex trading. However, this may indeed be only the tip of the proverbial iceberg. With continued instability in the Middle East and a predominantly bearish outlook in terms of the Asian markets, what can we expect to see during the remainder of the year? Let us take a closer look at a handful of predictions that are worthwhile to keep in mind.
The Weakness of Emerging Markets
One of the concerns for 2016 revolves around a potential slowdown of the global economy. While this does not by any means indicate the start of a recession, emerging markets such as those in portions of Africa could very well be affected by a diminishing demand for certain goods. Likewise, their currencies may be caught up in a downturn. Although this may not necessarily have a direct impact upon major currency pairs, it is still important to recall that a regional slowdown is likely to weigh further upon investor sentiment.
A Robust Dollar?
As many analysts had expected, the Federal Reserve of the United States raised its interest rates in December for the first time since the financial crisis first began. This was no great shock and provided some investors with a bullish (albeit short-term) outlook for the first half of 2016. Although the dollar has indeed gained ground in relation to the euro and the pound, it should be noted that this growth is not strong in terms of a long-term historical basis. In fact, there are certain traders who feel that the dollar may enjoy parity with the euro in the future. This needs to be taken into consideration with the observation that the economy of the United States is seen as being somewhat mediocre during 2016. Should one financial quarter hint at further stagnation, any actions by the Fed could end what is seen as a recent tightening cycle.
A Weakening of the Renmibi
Although the Chinese renmibi was recently approved by the International Monetary Fund as a Main World Currency, this has not seemed to help its flagging value. The Asian markets experienced a great deal of turmoil due to investor fears and interestingly enough, they have been automatically shut down to avoid panic selling no less than twice in January. This signals that the renmibi is likely to continue to weaken. Should further amounts of negative economic data emerge (as is expected), the markets are likely to take additional hits. The question is whether or not these hits will drag down the global economy. Online Forex traders may very well be able to take advantage of such volatility in the months ahead.
Less of an Appetite for Risk
Above all, it is believed that 2016 will be partially defined as a year marked by a heightened aversion to risk in regards to Forex trading. Much of this has do to with the aforementioned scenarios which are expected to play out to a certain extent. Another reason for this concern is what some have called less liquidity within the sector due to increased regulation. The question of what effects this regulation will ultimately produce remains to be seen.
We should note that these predictions may very well change as dictated by global and economic events. Employing online platforms will make certain that any trader stays well ahead of the curve thanks to live news feeds and streamlined trading platforms. It will be very interesting to see what the coming twelve months have in store for the Forex markets.