background image

Markets 2019 – what lies ahead?

Forex 4 minutes to read
Picture of John Hardy
John J. Hardy

Global Head of Macro Strategy

Summary:  After a torrid year, capped by a treacherous finale, our Head of FX Strategy runs us through the hurdles and opportunities that await in 2019.


This is my last post for 2018 and I look forward to a 2019 that could prove one of the most interesting years in global markets since the global financial crisis as we look forward to having the following questions answered:

Are we headed into a global recession?

And just as importantly, what will the policy response look like the next time around? We suggest the next cycle of policy response will see central banks losing their independence as their reactions to the last crisis only dug a deeper hole and the answers to the world’s excess debt problems will have to be answer by government policy with central banks as auxiliaries to that policy.  

When will the US dollar turn weaker?

The tight Fed and the liquidity absorption one-two of Trump’s fiscal blitz from tax reform and the Fed’s QT have dried up offshore USD liquidity – the key drivers of the US dollar’s 2018 resurgence – will the USD only weaken again when the Fed is forced to not only stop tightening but to reverse course?

Can China deal with its need to deleverage while maintaining relative yuan stability?

Certainly, less risk now for the Chinese economy if China chooses the weaker yuan path, given the massive sell-off in crude oil.

EU politics – spinning apart or pulling together?

The EU political situation and increasingly the financial situation in EU banks is in a bad place as we head into a pivotal 2019 for the EU.  Possibly pivotal EU parliamentary elections are the first political litmus test in May. France and Italy’s budget situation will emerge again sooner or later next year and the EU political elite needs to wake up and get ahead of the curve by ending austerity and providing a roadmap towards greater mutualisation of debt, otherwise the countdown toward the next country to exit the EU – the euro currency area at least – begins.

Whither Brexit?

A second referendum appearing more likely and supposedly favouring a Remain vote – but wouldn’t a narrow overturn of the original Brexit referendum then trigger civil strife across the UK? At worst, even if we are heading toward a “no deal” Brexit, a significant delay is likely first and sterling looks too cheap even if more two-way volatility awaits early next year.

I will discuss the above questions and more in our quarterly outlook available around mid-month in January. Until then, a very happy New Year and please stay safe out there!

Quarterly Outlook

01 /

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.