OctaFX, a leading Forex broker that provides online trading services worldwide, has released its ‘New Trends of 2021 in the Trading Industry‘ today. These trends will be subject to the global economies disrupting COVID-19 pandemic – even the shape of foreign exchange trading has undergone severe transformations. Foreign exchange, or Forex, is the world’s largest financial market with currently around 2.4 quadrillion U.S. dollars (or $2,400,000,000,000,000) in daily activity, where global currencies are traded every second.
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New Trends of 2021 in the Trading Industry According to OctaFX
Naturally, the Forex market depends on international trade between nations. The pandemic has caused a great deal of economic uncertainty, disruptions in trade, and heightened isolationism. Every country’s response to the health crisis will directly affect their domestic economies. And this, in turn, will cause significant ripple effects in the financial world.
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Impact of COVID-19 on the Forex Market
As the governments worldwide imposed near-total lockdowns to combat the virus, online businesses and brokers gained importance for keeping economies afloat. And as the prices of crude oil, gold, and stocks fluctuate regularly, uncertainty has never loomed larger, posing risks but also presenting prospective rewards. Hence, this has led to a boost of interest in COVID-19 and Forex trading relationships.
Although financial markets and industries generally are under serious shake-up, the Forex industry has been considerably thriving. Top Forex brokers have globally registered a surge in monthly trading volumes and new client accounts. This could be because of investors moving away from traditional stock trading, finding new income sources. Perhaps, it’s due to people increasingly starting to trade in Forex themselves. The ongoing pandemic catalysed the gradually rising popularity of Forex trading. Processes like these might serve as an explanation of why Forex brokers like OctaFX experienced a threefold rise in new clients last year.
Outlook for Forex in 2021
As COVID-19 continues to ravage economies worldwide, traders are on the lookout for new markets and opportunities. Though the volatility is bound to decrease at some point, for now, the exchange rates will continue being reactive to shocks, in turn, increasing both the risks of Forex trading and the possible opportunities.
Specific patterns visible in 2020 will likely continue into 2021 as well. The pandemic will be a significant consideration in the new year, creating volatility concerning control of the coronavirus. Nonetheless, policymakers are proactively discussing growth and inflation to reduce public debt burdens. The biggest takeaway from the past year has been not to take risks, leading OctaFX analysts to advise looking at graphs displaying fluctuations of a chosen currency. This will give an idea as to why they lost value. Markets are far too volatile to bet on overly unpredictable pairings. Industry professionals and investors will rely on safe-haven currencies that have remained significantly profitable even during the current disruption going forward.
The pressure remains high on the U.S. dollar as market professionals expect it to fall by about 5-10% more. Levels as low as in 2008 are not on the horizon, for U.S. President Joe Biden will return to a rules-based international order with balanced global growth. The Australian dollar ended the year pretty strong and is safe, owing to local interest rates, which will be low in most developed countries.
The U.K. pound will continue to face pressure due to the strict lockdown measures imposed to contain the new variant of coronavirus and subsequent slow recovery rates. Despite suffering from the second wave of coronavirus, the Canadian dollar still might have a favourable run in the new year as the situation stabilised to a large extent in December. The COVID-19 pandemic proved supportive for the euro as traders turned their attention to the problems of the U.S. dollar. Hence, experts await the euro to rise higher.
A new generation of traders
Another trend that is likely to grow in this new year is individual investments. The worldwide health crisis has led to the growth of self-employed remote workers. Forex trading is not an exception to this trend. Likely, the reliance on commercial or investment banks to trade on behalf of their clients will reduce, and people will take to trading themselves.