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Demand for the Mexican peso increased despite the interest rate cut by the Bank of Mexico. Central bank Governor Agustín Guillermo Carstens Carstens slashed Mexico’s rate for the fourth time last Friday, December 20. This was amid fears that 2020 might be the year for a global recession. The Federal Reserve also cut its benchmark three (3) times this year. The US has now the longest expansionary period in the country’s history. Despite this, economist argued that the US economy is heating and might explode at any moment. In an effort to prevent a looming recession, the US signed a phase one trade deal with China and ratified the NAFTA (North American Free Trade Agreement) in a span of five (5) days. The signing of NAFTA, also known as USMCA (United States-Mexico-Canada) came a day after US President Donald Trump was impeached by the US House of Representative.
The US dollar will continue to be dragged by Norway’s announcement that it will tap Huawei for its 5G network rollout by 2020. The telecom giant became one (1) of the target with then escalating US-China trade war. US President Donald Trump accuses Huawei of cyber espionage and pressured allies, specifically the members of the Five Eyes Intelligence Alliance, to ban the technology company. However, this doesn’t stop Huawei to expand its influence across the world. This year, Norway’s $1 trillion sovereign wealth fund broke records for returns. Collectively, Norway Fund accounts for 1.3% of global stocks. The news had made demands for the Norwegian krone to increase. Norway is also ramping up its oil production as members of the OPEC (Organization of the Petroleum Exporting Countries) cut their supplies, sending oil prices higher. Tensions in the Middle East is also expected to push oil prices higher.
The pressure on Czechia is crippling on the European Union. A week ago, thousands of people marched in Prague to ask Prime Minister Andrej Babis to resign from his post. This was amid allegations with the populist billionaire of allocating the EU funds for his companies’ benefit. The protest continues despite Hungary gaining a major position on the newly formed European Commission and bridge the relationship of eastern and western Europe. In addition to this, eastern European mayors created an anti-populism pact and urged the European Union to bypass national governments and fund cities directly. The group, known as “Little Visegrad”, calls themselves as “pact of free capitals”. The growing tension between the eastern and western Europe together with the slowdown in Germany and uncertainty over the Brexit, is hurting the single currency. The euro will further be dragged once the United Kingdom officially leaves the bloc on January 31, 2020.
Poland is leading the new wave of anti-EU governments. Polish Supreme Court said in a statement that the ruling nationalist party, the Law and Justice (PiS), might fire judges if they question the legitimacy of the government’s judicial reforms. Recently, a law was passed limiting the retirement age of judges, which the EU said was a violation of the rule of law. The continued violations of Poland could send the country of the EU, according to former European Council President Donald Tusk. Poland has also dropped out of the European Green Deal, which is aimed at combating climate change. The uprising in Poland and Visegrad nations as a whole has inspired Spain to threaten Brussels of leaving the bloc. A decision by the European Court of Justice has given Catalan separatist leader Oriol Junqueras a new hope as the organization claimed that Junqueras must have a parliamentary immunity after winning in the European Parliament election.
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