Coronavirus: A deeper recession but not depression – Morgan Stanley

FXStreet Team FXStreet

Falling demand and disrupted supply chains will trigger a global economic recession. However, strong monetary and fiscal policy responses under way could set the stage for a second-half rebound, according to economists at Morgan Stanley.

Key quotes

“Chief U.S. Economist Ellen Zentner now expects a full-year 2020 contraction of 3.0%, instead of her previous 0.6% growth forecast. Such a decline would trim global growth to 0.3% for 2020.”

“The global economy is set to contract on an annualized basis by 0.6% and 2.1%, respectively, in the first and second quarters. If a recovery takes root in the third quarter, the global economy could rebound to 4.8% growth, YoY, in 2021.”

“Chief China Economist Robin Xing base case for China’s economy is now 4% growth for 2020 and 7.5% for 2021.”

“In the euro area and the UK, Chief Economist Jacob Nell expects the euro area economy to contract by 5% this year, and the UK’s GDP to contract by 5.1% in 2020. Assuming that the pandemic peaks by April/May, euro area and UK growth could rebound 5.5% and 5.6%, respectively, in 2021.”

Author

FXStreet Team

FXStreet

EUR/USD holds losses near 1.1850 as US, China holidays keep trade muted

EUR/USD opens the week on a softer note, trading near 1.1860 during the Asian session on Monday. Activity is likely to remain muted, with United States markets closed for the Presidents’ Day holiday, while Mainland China is also shut for the week-long Lunar New Year break.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold remains below $5,050 despite Fed rate cut bets, uncertain geopolitical tensions

Gold edges lower after registering over 2% gains in the previous session, trading around $5,030 per troy ounce during the Asian hours on Monday. However, the non-interest-bearing Gold could further gain ground following softer January Consumer Price Index figures, which reinforced expectations that the Federal Reserve could cut rates later this year.

Top Crypto Losers: Dogecoin, Zcash, Bonk – Meme and Privacy coins under pressure

Meme coins such as Dogecoin and Bonk, alongside the privacy coin Zcash (ZEC), are leading the broader market losses over the last 24 hours. DOGE, ZEC, and BONK ended their three consecutive days of recovery with a sudden decline on Sunday, as crucial resistance levels capped the gains. Technically, the altcoins show downside risk, starting the week under pressure.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.