Here are three key areas that will demand forex traders' attention throughout 2020.
If traders want to thrive during times of political uncertainty then it is imperative that they monitor all developments that could affect the value of the world's major currencies. This includes the fractious trade relationship between the United States and China, where protracted disagreements over tariffs could limit the growth of the US dollar.
The United Kingdom is at a similarly crucial juncture in its trading relationship with the EU, with failure to secure a trade deal by the end of 2020 expected to limit the upward mobility of the GBP. Tracking market shifts daily informs long-term strategies, while using accessible trading platforms will help forex traders to manage the climate of uncertainty in 2020. For example, IG's forex platform is available for use at any hour so traders can respond immediately to news emerging from any part of the world.
That is crucial for responding to market shifts driven by the coronavirus outbreak, given the global nature of the virus. While trade disputes have fixed conclusions that boil down to "deal or no deal", the coronavirus outbreak is harder for investors to manage. It is almost impossible to predict the lasting effect of the virus on economies and currencies, so forex traders will have to be ready to react to the latest developments.
Cryptocurrency trading has become increasingly regulated, but its popularity shows no sign of diminishing. This has inspired many forex brokers to diversify their services to include cryptocurrency trading options. While cryptocurrency trading operates in a similar manner to forex trading, market movements are traditionally harder to anticipate.
While shifts in the value of a currency are driven by political and economic developments, fluctuations in cryptocurrencies are responsive to trends in the world of IT. These trends are generally harder to understand for traders, and not through any fault of their own; there are decades of data on foreign exchange markets, but cryptocurrency's relative newness means that the markets remain very volatile.
However, new technology should be introduced in 2020 and beyond to ensure that cryptocurrency markets provide a more mature and realistic trading experience. This could include the introduction of further trading pairs that match cryptocurrencies with more predictable fiat currencies, grounding these digital coins in a more relatable context.
Brent crude oil prices can have a huge impact on the global economy, given that so many nations are reliant on oil as an imported energy source or a key export. When oil prices rise, it can drive currencies like the USD down in value, so forex traders should monitor all of the policy decisions set forth by the Organization of Petroleum Exporting Countries (OPEC).
The coronavirus outbreak will have a long-term effect on the oil trade. Even when production starts to rebound after the destruction of the virus, the oil industry will be recovering from a period of reduced revenues. Economic stagnation following the outbreak will reduce demand for oil, which could therefore send prices spiralling upwards for an extended period.
This is why it is particularly important for forex traders to keep track of developments in the worlds of politics, technology, and trade. While 2020 may be a challenging year, traders have more tools at their disposal than ever before. With 24-hour trading platforms and the increased connectivity promised by 5G networks, forex traders will be able to respond quickly and effectively to news breaking from anywhere in the world.