Weakening the global economy can complicate the central bank's policy

Weakening the global economy can complicate the central bank's policy

Weakening the global economy can complicate the central bank's policy. The fall of Sweden krona to its lowest level for more than a decade against the dollar on Thursday was caused by one thing that penetrates the financial markets: the global central bankers.

Risbank Sweden joined the group of central banks, including Bank of Japan and Bank of Canada in the last few days, reducing the possibility of normalizing monetary policy in the era of crisis, amid growing fears of contract growth International.

To date, global currencies have suffered as a result of economic contraction, with most of the major currency units weakening against the dollar.

However, since the central bank is betting on the idea of raising its reference costs for borrowing, and strengthening the local Fiat currency, the capital economy says the correlation between politics and currency will be reduced. The research firm stated that the increase in trade-related risks would determine movements in the foreign exchange market.

 "We don't think that monetary policy will continue to be the major currency drivers this year ", analysts in the capital economy said Thursday discussed steps recently in Canada's Sweden krona, dollar and yen Japan.

How Does The Weakening Global Economy Could Complicate The Central Bank's Policy

Instead, they claim that the rally in oil is nearing the top that would stop the sales action on the Luney, and the anxiety attacks market will limit the weakness of the yen and take over as the drivers of the krona. "According to our estimates, the Swedish krona will weaken against the dollar," they said.  "But it only reflects our view that the currency of Sweden will remain stable against the euro, while depreciable against the dollar last because of the demand for asylum ".

What is called an asset is an asylum, like the Japanese yen, US dollars, and tends to rise during the turmoil in the Treasury market.

In addition, the influence of the central bank in the local currency will be limited when the Federal Reserve pursues, analysts said:  "We expect three lower interest rates 25 [base points, or 0.24 percentage points] to the middle of the next Year, while less than two are now valued in the market  ".

Three reduction rates of the FED funds will look down on the range from 1.50% to 1.75%. Forex traders tend to put money in currencies of countries where interest rates are comparatively higher.

Other central banks can be organized to adopt policies that are more easily.

In March, the European Central Bank stated that it would launch a new round of cheap financing, known as a targeted long-term refinancing operation or TLTRO. After a brief meeting of the post-war rally, the euro was in a steady decline, to the lowest level traded 23-months at $1.1118 on Thursday.

Currently, the capitalists economy is of the opinion that the period of global growth-friendly, will soon take place.  "In our view, economic activity frustration will encourage investors to move from risky assets to safe havens later this year ", researchers say.

The possibility can lead to further increases to the dollar, krona, and yen, among other currencies, are considered safe during periods of uncertainty.

Concerns over the global economic downturn dominate the markets on Monday, sending oil prices below and pushing investors to expect a pigeon tone from the Federal Reserve in a statement this weekend.

Oil prices are a bit slack given the weak global data signaling the decline in demand, but still supported by the decline in OPEC production realized at the beginning of the year to keep prices from recession. Futures on the US WTI fell by 0.07 percent in 02:57 at night. HK/SIN, be $58.48 per barrel. Brent oil futures were traded slightly higher to 0.22% to $67.31 per barrel. The International Energy Agency (IEA) announced on Friday that it estimated the oil market would experience a moderate deficit from the second quarter of this year. Meanwhile, OPEC remains committed to reducing its production as Russia does, at least until the end of June. Similarly, the United States remains committed to sanctions against Iran and Venezuela, which will also help to reduce global supply.

Currency movements

On Monday, Japan, that export Dilatoran shrank for the third month in a row to make the market fluctuate and weaken the yen. The dollar grew by 0.07% against the yen traded 111.53, although the dollar remained mild against the rest of the major trading partners. Similarly, weak data from the US on Friday confirmed a decline of 0.4 percent in U.S. production in February, and fanning investors ' worries about the Federal Reserve to adopt the pigeon-tone policy this weekend. According to Reuters, many investors expect the Fed to hold interest rates in the near future and will present a plan to put an end to the balance sheet stock later in 2019.

The dollar index is down 0.15 percent in the middle of the day, to 96.45. Dxy. See the Sharp Weekly index loss last week from August. The euro was a strong increase against the dollar, climbed 0.13 percent to $1.1339, while the Australian dollar rose 0.41 percent higher against the dollar.

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