Global economic outlook: A perspective on Forex markets

Published On: Dec 8, 2023By

Banking giant ING has released its Forex outlook for 2024. It is focused on a prediction that the strong global US Dollar trend will begin to reverse.

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The US Dollar Stands on a Precipice

ING reports that there has been a strong US Dollar trend during the second half of 2023. This has been driven by robust growth for the US economy and high-interest rates that have attracted users to the Dollar’s safe-haven appeal.

According to ING, this momentum is unsustainable and they expect the US economy to enter a recession in the first half of 2024. They say this will push the Federal Reserve to increase interest rates by as much as 150 basis points.

They say the Dollar will struggle against undervalued currencies. They note the Norwegian Kroner and the Australian dollar as examples. They say these currencies will grow as the dollar wanes.

Zeroing in on the EUR/USD pair, they forecast that the Eurozone will also suffer from a recession. They note, however, that if the region can weather the early economic battles of the year, ING believes that the Euro will grow against the USD, setting its price for the end of 2024 as 1.15.

Goldman Sachs Research offers a different perspective. They say that 2024 is set to be a period of strong global economic growth, continuing a positive general trend. Generally, during these periods riskier currencies from emerging markets tend to outperform the dollar.

Goldman Sachs Research, however, notes that the US economy has outperformed the rest of the world in 2023 and they predict the country will do so again in 2024. The US economy is on track to grow at 2.4% in 2023, which well surpasses the 0.4% consensus growth estimates at the start of the year.

Data published in November 2023, suggests that the global economy is set to grow by 2.9% in 2023. The US economy grew by 5.2% between July and September (Q3 2023) and outperformed most major developed economies. The German economy, for example, contracted by 0.1% in Q3 2023, and the Australian economy contracted by 0.2%.

The OECD expects this trend to continue and predicts this trend will continue in 2024 and 2025.

GDP Growth
Goldman Sachs suggests that a key factor in the dollar’s appeal is not a flight to safety because of an uncertain global environment, but more the strength of the US economy when other developed nations have struggled.

The US dollar enjoyed an excellent period of momentum between July and September. The dollar index, which measures the US dollar against a basket of other major currencies, had 11 straight weeks of gains. This was the index’s best run since the winter of 2014–2015.

Dollar index (DXY) 2023 Performance

Dollar Index (DXY) 2023 performance

In the lead-up to the US dollar’s tremendous run, however, the currency was volatile. There have been viewpoints for some time that some of the USD’s dominance as the world’s reserve asset may wane. In the first part of the year, significant tailwinds were suggesting the de-dollarization movement was picking up momentum.

The BRICs were deepening ties and signaling that a currency was being set up to be used within the network of powerful nations. Oil producers were also hinting that they were gearing up to drop the Petrodollar and building agreements with native partners.

In the latter half of the year, however, global interest rates rose and the US economy showed much more resilience than developed economies.

The emerging market conditions

The 2020s were meant to be the decade of the Emerging Markets currency. Currencies like the Korean Won, Brazilian Real, Australian Dollar, and Indian Rupee had been expected to gain strongly against the Dollar. In 2023, however, with the USA’s central bank staying committed to keeping interest rates high, gains against the Dollar have been slow. The USA’s 5.5% interest rate is higher than Japan, South Korea, Singapore, and Australia and is in line with New Zealand.

Some of 2023’s expected tailwinds to drive the value of emerging markets forward were China’s post-COVID recovery and a weaker dollar. These tailwinds may still boost the wider emerging markets currency sector and generate some positive gains in 2024.

It is likely the case, however, that because of the various unique economic characteristics of countries within the emerging markets sector, it is difficult to view this group of countries as a whole. The performance of an emerging market nation’s currency may depend on whether a country is a net energy importer or exporter. It would also depend on a country’s equity market and investor trust in its Central Bank.

One of the worst-performing forex currencies in the world this year has been the Japanese Yen, because Japan’s Central Bank has committed to keeping interest rates extremely low and negative.

USD/JPY Pair 2023 Performance

USD/JPY pair 2023 Performance

CHF/JPY Pair 2023 Performance

CHF/JPY pair 2023 performance

The emerging market is set for a stronger year, however, with indications that the US economic growth is finally losing steam. This is leading to many analysts predicting lower interest rates, and a devaluing US Dollar.

How much an emerging market currency can gain against a developed economy’s currency in 2024, at least for a chunk of it, will depend on a country’s ability to drive unique triggers for economic growth.

India for example, has caught the eyes of international investors because of its large, young mobile population. The country has impressive GDP growth but the nation’s currency has struggled against the dollar in recent years. Will 2024 finally be the year it can break free?

Brazil is a major oil exploiter and also is a major exporter of soybeans to China. While the country’s interest rates are high sitting at 12.25%, they were recently cut down from 12.75%.


As we approach 2024, the story of the US Dollar and the global economy seems to be at a pivotal crossroads. On one hand, ING’s forecast paints a scenario of a weakening US Dollar, challenged by an imminent recession and rising interest rates. This shift potentially empowers undervalued currencies and marks a significant departure from the Dollar’s dominant run in 2023.

In contrast, Goldman Sachs Research is more optimistic about the US Dollar, buoyed by robust economic growth and economic resilience in the United States. The world’s largest economy is outpacing its global counterparts. Their perspective suggests a continuation of the Dollar’s strength, drawing on its appeal not just as a safe haven but as a reflection of the US’s economic vitality.

This dichotomy in forecasts reflects the complex and intertwined nature of global economic dynamics. Emerging markets, once anticipated to be the powerhouses of the 2020s, find themselves at a juncture where their future against the Dollar hinges on unique economic triggers and the handling of external pressures like interest rates and market confidence.

Countries like India and Brazil emerge as focal points in this narrative, their potential growth weighed against established economic powerhouses. The evolving story of the US Dollar thus becomes a mirror to the changing landscape of global finance, where old narratives are being questioned and new possibilities are emerging.

You can never count the Dollar out, particularly in a global economy that is dealing with uncertainty. It is unclear whether the global economy is set to suffer from a recession, or a reset that forces major economies to switch to an interest rate-cutting regime. A dollar position is pragmatic in this situation but we also like Gold and Bitcoin as alternative safe haven options.

We also look bullishly at the currencies of stable economies already showing strong signs of economic growth. Like Switzerland, the Swiss Franc (CHF) has been a darling for Forex Bulls in 2023 thanks to the country’s resolute Central Bank and global confidence in its economy. Net Energy exporters are also on our mind and currencies like the Norwegian Krone may be worth positions in the next year.

CHF/USD Pair 2023 Performance

CHF/USD pair 2023 performance

NOK/USD Pair 2023 Performance

NOK/USD pair 2023 performance