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#1 21-05-2020 08:56:00

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2796
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Forex + Index + Commodity: forecast for Q1 2021! (Deutsche Bank)

Forex + Index + Commodity: forecast for Q1 2021! (Deutsche Bank)


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In a letter to investors, Deutsche Bank's lead investment manager outlined changes to the bank's economic outlook for this year. He details the implications of the COVID-19 situation and forecasts the performance of stock market indices and other asset classes for the next full year. One of the newspaper's headlines was the bank's view on the S&P 500, which is expected to trade above 3100 by the end of the first quarter of next year. While Germany's DAX index is expected to hit 12,000 points.

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The letter predicts an economic recovery - expecting a strong start initially, followed by slow growth. Analysts are already anticipating an improvement, and DB (Deutsche Bank) believes that it is likely that the prices of shares will be supported by near-zero interest rates for the coming years.

As a result, and with no other alternative, traders will likely continue to focus on high-dividend shares. As a result, high price/earnings valuations could reach unusual levels. DB continues to view the tech sector as the driving force behind the equity markets, due to its strong fundamentals, high liquidity and low debt levels. The tech sector is also seen as one of the sectors benefiting most from increased government intervension.

What can we expect with commodities and the forex?

In 2021, gold will still be at current levels - $1,800 according to DB's forecast. The main argument is that gold, although still considered a safe asset, tends to suffer from traders' race for liquidity in times of crisis. As we have already seen at the beginning of the virus pandemic, the initial reaction on the price of gold was correlated with equities - lower, due to the sale of assets by investors for cash.

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The 12-month WTI crude oil futures contract is estimated at $36.50, mainly due to a gradual increase in demand. If China's economic recovery continues, demand is expected to balance high supply, as major producing states have significantly reduced production.

An interesting point raised by DB is about the forex. Japan's yen is strengthening across the board, with significant gains against the USD and the EUR. The USDJPY exchange rate is estimated at 105 in the coming months, while the EURJPY is forecasted as declining to 115.

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