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Market update: IMF upgrades global growth, as major economies show resilience


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IMF's global growth upgrade fuels 'soft landing' optimism, slightly lifting oil and gold post-release. AUD/USD remains uncertain. Key risk events loom: BoE and Fed decisions, major earnings, and NFP report.

 

original-size.webpSource: Bloomberg

 

 Written by: Richard Snow | Analyst, DailyFX, Johannesburg | Publication date: 

IMF upgrades global growth as ‘soft landing’ hopes gain traction

The International Monetary Fund (IMF) upgraded its outlook on global economic growth, as major economies reveal their resilience. Disinflation also continues to push prices lower, supporting a potential soft landing in 2024. However, there is acknowledgement that risks related to geopolitical conflicts, could affect global trade. In addition, the IMF also highlighted the potential for stubborn price pressures if reducing interest rates loosens financial conditions too much.

The IMF provided an update on its global growth forecast, seeing the 2024 estimate rise from 2.9% back in October, to 3.1%. The organisation foresaw greater than expected resilience in the US, seeing its estimate for growth in 2024 rise from 1.5% to 2.1% for 2024. The organisation also acknowledged China’s fiscal efforts to jump start the local economy, seeing estimated growth rise from 4.2% to 4.6% this year.

IMF upgrades its global economic outlook

 

original-size.webpSource: IMF World Economic Outlook

Markets have responded positively as gold and oil both moved higher in the wake of the update, although, gold has since reverted back to prices observed before the report was released. Oil received a boost, and remains a market filled with complexity amid supply chain uncertainty along the Red Sea and a rosier global economic outlook. API data later today, EIA storage figures and the NFP print on Friday provides oil traders with lots to think about this week.

AUD/USD, the last chart shown below, is generally reflective of risk sentiment and hadn’t really seen a long-lasting advance in the minutes after the IMF’s update. The aussie dollar is procyclical in nature which means it exhibits a strong correlation with the S&P 500, although this has weakened recently and may be something to keep an eye on if aussie/China fortunes deteriorate in relation to the US.

Multi-asset performance in the moments following the IMF’s global growth upgrade

 

original-size.webpSource: TradingView

 

 

 

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