Date: 17 Jul 2019
The acting Managing Director of the International Monetary Fund David Lipton outlined the case for global growth to remain sluggish for the rest of 2019 on Tuesday. The acknowledgment came as China officially posted its weakest growth figures in over two decades, with the powerhouse Chinese economy growing by just 6.2 percent during the second quarter of 2019. Worryingly, China’s Premier Li Keqiang admitted yesterday that downward pressure on the world’s second-largest economy has started to accelerate, which could place an even greater emphasis on China’s trade negotiators resolving the trade dispute with the United States, as stated by the IMF yesterday.
David Lipton also laid out the IMF’s base case scenario for the global economy on Tuesday, where the International Monetary Fund expects almost all leading economies to avoid an economic recession this year, while global growth continues to crawl along at a much slower than-expected-pace this year. The IMF’s acting Managing Director added that the U.S economy remains robust, but the world’s largest economy has seen no pickup in inflation, despite the booming jobs market. Mr. Lipton recently moved into the position as acting IMF Managing Director, after Christine Lagarde vacated the top job to become the next ECB President.
Calls are now growing from the IMF for further decisive policy action from central banks across the world if growth continues to dissipate. Speculation is also growing that the European Central Bank will provide further policy stimulus this September, as European inflation and growth prospects continue to falter. Economic signals for the third quarter of 2019 currently look bleak for the euro area, as the German ZEW survey’s headline reading tumbled to its weakest level since 2010 on Tuesday. The euro currency weakened immediately after the ZEW report and the bleak warning from the IMF’s acting Managing Director.
EUR/USD Mountain Chart | Source: ActivTrader
The EUR/USD continues to lack overall direction as the pair remains trapped between the 1.1185 to 1.1285 price range. A sustained break of the 1.1185 support level may see the EUR/USD pair falling back towards the 1.1130 level. Bulls need to move the EUR/USD pair back above the current weekly pivot point, at 1.1248, in order to encourage another test of the 1.1300 resistance level.
Written by Nathan Batchelor, External Analyst, ActivTrades
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