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The United States is leading the world towards recession, which is being reflected on the weakening U.S. Dollar. The U.S.-China trade tension had escalated towards major and emerging economies. EU’s economic powerhouse Germany is in the verge of recession, Japan is losing economic and monetary policies to combat slow growth, and the UK is crashing out of the EU without a deal. But the U.S. also inspired trade protectionism with Brazil leading a stronger, united, and protectionist economy of South America. However, the trade war might hit these countries back as evident with the United States. America’s economy has never been as powerful as it is today. Despite this, its economy is facing recession amid the heating economy, which might trigger an economic bubble. Brazil has recently agreed to a draft deal with the EU after 20 years negotiation but might lose it following the populist and protectionist policies of Bolsonaro.
U.S. decision to sell its F-35 fighter jets had helped the U.S. dollar to remain strong against the Romanian Leu. Following the fallout of U.S.-Turkey relationship after the later’s purchase of S-400 missile defense system from Russia, the U.S. Dollar loses its momentum as President Trump suspend Turkey on its F-35 Program. The F-35 program is settled in U.S. Dollar, which added to the strength of the Greenback. Aside from this, Standard and Poor’s expected Romanian economy expansion to be below 4%, stimulated by public and private consumption. In 2020, however, economic growth cycle is expected to reverse, and the GDP will decrease to 3.00% to 3.50% and possibly even lower. The government is expected to tighten its budget this 2019 to counter the expected increases in pension spending in 2020 and 2021, following Romania’s presidential election on November 10.
The Euro has been hit by the news that Norway is looking for alternatives to the sluggish European Union growth. Norway’s $1 Trillion sovereign wealth fund, the world’s largest, may seek to shift the balance of its investments between Europe, the Americas, and Asia. EU’s largest economy shows signs of a looming recession coupled with the withdrawal of the United Kingdom, EU’s third largest economy and the world’s 7th largest. Amid this, investors are optimistic that former IMF (International Monetary Fund) Director and the new ECB (European Central Bank) President Christine Lagarde can control the looming Eurowide recession. The EU is also expanding overseas, sealing a draft agreement with the Mercosur, South America’s largest trading bloc, and ratifying the EU-Japan Free Trade Deal, the largest trading zone in the world. The Single Currency is expected to weigh higher than Norwegian Krone.
Hungarian Central Bank Governor Gyorgy Matolcsy criticized Hungarian Finance Minister Mihaly Varga for his recent comment suggesting the country’s “golden age” was nearing to end due to an unexpected slowdown. This was amid recent reports showing Hungary’s economy growing 4.9% in the second quarter of 2019, the second fastest among EU-member states, but is lower compared to the 5.1% growth in the first quarter. This is expected to weigh down on Hungarian Forint against the Single Currency. This first open conflict between two (2) key economic policymakers suggests a dispute inside the country’s economic affairs. However, things might further get complicated as the remaining EU-members states not using the Single Currency will need to adopt Euro by the end of 2020, which will make Hungarian Forint volatile in the coming months.