Forex Analysis & Reviews: 21.02.2019 - US financial market returns...

21.02.2019 09:12 AM

US financial market returns to disaster

No wonder it is considered that when you want something very badly, you will definitely get it. The financial markets were fully able to "convince" that it was not only time for the American regulator to curtail the process of raising interest rates but also planning to stop reducing its balance sheet already this year.

The collapse of the US stock market at the end of last year showed that it could not actually continue to grow in a naturally normal way relative to the movement of the state of the country's economy. What was previously said and recently stopped is pumping the local stock market with money from quantitative easing programs (QE). As a result, there was inflation of the financial "soap" bubbles, which were associated with the associated risks to the previous director, Janet Yellen. The Fed is beginning to show up clearly, which indicates that the local financial system is firmly seated on the needle.

In fact, it turns out this way but earlier, we repeatedly pointed out that the growth of the stock market in America was inadequate to the growth of the economy after the 2008-09 crisis. It took off estimated to be as much as the money from the three QE programs pumped into it. This discrepancy repeatedly worried Yellen, who began the process of normalizing monetary policy, fearing the collapse of financial bubbles. However, as they say, the music did not last long. As soon as the market realized that it did not have enough money to continue unreasonable further growth, he signaled the Fed with its local collapse last December, forcing the regulator to back down.

The desire of the Fed to reduce its balance to acceptable values from a maximum of 4.5 trillion dollars was cut off at around 4 trillion dollars. The market is eager for a lot of "cheap" money, and it looks like it will receive it in a situation of further growth with simultaneous inflation of financial bubbles, which is already somewhere ahead. Moreover, this topic is actively pedaling the current US president. In turn, this threatens a new collapse of the markets and, in our opinion, it will be more serious, if not catastrophic, for the current liberal economic model. The economic crisis that will be much more severe and with the gravest consequences but it seems that there is no other way and sad times await us.

Forecast of the day:

The EUR/USD pair is trading below 1.1355. It was unable to gain a foothold above this mark. If the performance data from Germany is worse than expected, this may lead to a price reduction to 1.1270.

The USD/CAD pair is above the level of 1.3185 and receives support in the wake of the publication of data from the American Petroleum Institute, which showed a strong increase in crude oil reserves over the past week. If today's data from the Department of Energy confirms this trend, the price may go up to 1.3285.