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IMF World Economic Outlook and the Dollar

This Wednesday, the IMF will release the World Economic Outlook. After the previous gloomy outlook, this week’s forecast will significantly impact the mood of traders and the direction of the US dollar.

World Recession

On April 22nd, the International Monetary Fund (IMF) will release it’s World Economic Outlook. Last time, the IMF said that whole world will be in recession in 2009. They predicted a global contraction of 0.5% to 1%.  

This is the first time in 60 years that a global recession is predicted. In past global crises, some countries suffered from recession, while others continued to grow. The outcome was a decline in growth. When thiese crises ended, growth accelerated.

After the last historic and gloomy outlook, the upcoming forecast becomes very interesting. The IMF will publish a forecast for the whole world, as well as economic forecasts for individual nations.

Risk Ruling the Forex Market

Currency trading is still highly affected by the “Risk Factor”. This means that when bad data is published in the US, traders flock to the US dollar – the safe haven currency in times of trouble – risk aversion. When good figures are published in the US, traders seek profits in other currencies, usually with a higher yield – Risk appetite.

If the IMF posts a more  optimistic outlook, the stock markets will rise and the dollar will lose to other currencies. Everybody except the Yen. A better forecast can be published after some recovery signs have shown recently. The American housing market has bounced off the bottom. Also last week’s Unemployment Claims have surprised, but this is a small light in a sea of terrible job data.

On the other hand, if the outlook continues to be bad, stocks will fall and the dollar will gain. Despite some signs of recovery, the world is still suffering from the global recession. In some countries, it’s still only the beginning of the crisis.

This week doesn’t feature a lot of American figures. The significant American figures are published only on Thursday and Friday, and they’re not the most important ones. This scheduling gives the IMF publication more impact.

So, stay tuned to the IMF World Economic Outlook release on Wednesday. It should be interesting…

For a review of the economic figures due this week, check out the Forex Weekly Outlook.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.