Especially in a moment of unparalleled economic disruption, the sentiments of British economist John Maynard Keynes should serve as our lodestar. Writing presciently in 1933 on the dangers of excessive national self-sufficiency, Keynes provided some key wisdom. He advised anyone trying to solve a nation’s fiscal woes to proceed “super slow and careful." His cautionary approach is as relevant today as it was then. Financial markets are under a lot of pressure too, as the above picture ominously alludes. Shockingly, one of those largest-ever spending resolutions! Top of mind now are the latest Fedspeak developments. Former US President Trump’s Oval Office address about the COVID-19 pandemic has only further complicated the new economic landscape.
Keynes’ article on national self-sufficiency serves to underscore the personal nature of Keynes expressive point of view. These views do not necessarily represent the views of FXStreet or FXStreet advertisers. His cautionary insights about the dangers of overreaching are an encouraging sign that we can still call for delicate maneuvering and coordination from economic policy-makers. While markets process these historical viewpoints, present financial markers certainly warrant consideration as well.
European trading Friday saw modest losses for the EUR/USD pair, heading toward 1.0800. This decline can be explained by the strength of US Dollar repurchasing and a greater wariness on the part of investors. During the first European sessions, the GBP/USD pair find it difficult to overcome 1.2950 as resistance. This underscores the persisting volatility in the currency markets.
Gold prices headed lower for the second day in a row on Friday, mirroring overall market sentiment. Against the Japanese Yen (JPY), in contrast, the JPY enjoyed some relief from its depths but was nonetheless still weighed down with persistent selling pressure. The USD/JPY spike climbed 0.42%. At one point, the index had shot up to 149.42 with the index until press time, showcasing the US Dollar’s unnaturally strong position.
Yet these financial changes are a window into the complex forces operating in today’s global markets. Combined with Fedspeak and new geopolitical developments, investor sentiment is still reacting. This has unfortunately led many to call for the opposite – overly cautious approaches – as Keynes might have warned.