IMF’s Georgieva highlights global divergences in the recovery

Interesting comments from the IMF

Interesting comments from the IMF

The word ‘divergences’ should set off alarm bells for FX traders, because that’s essentially what we’re looking for. One country doing better than another is a currency trade and that’s what’s happening in the recovery and it’s why EUR/USD is falling today once again.

Her full comments:

  • Sees increased growth due to new US fiscal package and expected recovery in vaccinated economies this year
  • Multi-speed recovery increasingly powered by US
  • China sees ‘extremely high uncertainty’ over financial conditions
  • US recovery could trigger higher interest rates, tighter financial conditions and big outflows from emerging and developing economies
  • It’s prudent to keep an eye on financial risk including stretched asset valuations
  • IMF foresees sharp increase in insolvencies among small and medium-sized businesses

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